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A company recognised under Section 406 of the Companies Act of 2013 read with the Nidhi Rules of 2014 is referred to as a Nidhi firm. Their primary duties, which fall under the non-banking Indian finance sector, are money borrowing and lending among their members. It is a business that was set up specifically to instil the value of being frugal and prudent among its members. They go by a variety of names, including Mutual Benefit Funds, Benefit Funds, Permanent Funds, and Mutual Benefit Companies.
The following requirements must be fulfilled in order to create a Nidhi Company:
Immediately after incorporation, a Nidhi firm must fulfil the requirements listed below:
200 members must be the bare minimum.
The Company must have a minimum of 7 members and 3 directors for Nidhi registration application. The Nidhi Company may proceed in the manner described below after fulfilling this requirement:
Copies of the shareholders' and directors' PAN cards.
Directors and shareholders must provide identity verification, such as a voter ID, passport, or driver's licence.
Director and shareholder address documentation, such as utility and bank statements.
Passport-size images.
Proof of a registered office's property. a) Utility Bill + Ownership document + NOC, if the property is owned. c) If the home is rented out, the utility bill, the rental agreement, and the NOC.
The following actions are prohibited for Nidhi Companies under Rule 6 of the Nidhi Rules 2014:
Conduct lease financing, hire purchase, and chit-fund business. It is not permitted to purchase securities made by a body corporate.
Issue preference shares, debentures, or any other type of debt instrument under any name or format.
Any current account with its participants.
Make no purchases, agreements, or concessions before the Regional Director and the General Meeting have approved them in a special resolution.
Carry on any activity outside borrowing or lending under its own name.
Accept or lend money to anyone but its members.
Receive or lend money from the body corporate.
Engage in any partnership agreements related to their borrowing or lending business.
Publicity stunt for any type of deposit request.
whatever assets that its members have pledged as security.
Pay any brokerage or incentive for allocating funds, making loans, or attracting deposits from members.
Form |
Due Date |
Contents |
Important Points |
NDH – 1 – Return of Statutory Compliance |
90 days after the first financial year's end, and, if necessary, beginning with the second financial year. |
Details about the financial year's reserves, loans, deposits, and members |
Document submission form, E-Form GNL-2, for the registrar |
NDH – 2 – Application for Extension of Time |
30 days following the end of the fiscal year |
Application for a deadline extension for failing to meet the
post-incorporation requirements for members and deposits. |
Applications submitted via E-Form RD-1 to the Regional Director |
NDH -3 Half Yearly return |
30 days following the end of each half-year |
Information about the members, loans, and deposits for the specified time. It includes information on how many members were admitted overall in the past six months and how many members were no longer members as of that date. |
Document submission form, E-Form GNL-2, for the registrar |
NDH -4 |
To benefit New Nidhi the Company
60 days following the passing of a year from the date of incorporation
To the current Nidhi Company
Within a year of its incorporation date OR within six months of the day the Nidhi Rules 2019 went into effect, whichever comes first. |
To submit an application for status updating and designation as a Nidhi Company |
failure to submit NDH-4
Companies won't be permitted to submit Form SH-7 (Notice to Registrar of any Alteration to Share Capital), and
Type PAS-3 (Return of Allotment) |
AOC – 4 |
30 days after the annual general meeting of the company |
Financial Statements Submission |
|
MGT -7 |
After the annual general meeting but before 60 days |
Annual report and a roster of the company's shareholders |
Forms NDH -1 and NDH -3 must be properly submitted along with the required fees and a professional's certification.
The loan amount is limited by the following conditions:
Deposit Made (Rs) |
Loan Granted (Rs) |
Less than 2 crores |
2 lakh |
Greater than 2 crores but less than 20 crores |
7.5 lakh |
Greater than 20 crores less than 50 crores |
12 lakh |
50 crores or more |
15 lakh |
A Nidhi company that has not generated profits consistently for the previous three fiscal years is not permitted to make any new loans that surpass 50% of the maximum loan amounts listed above. If a member has missed a previous loan payment, he will not be eligible for any loans going forwards.
Gold/Jewellery
Personal loans, auto loans, hire-purchase loans, and microloans are not permissible from Nidhi Companies. The Firms Act governs Nidhi companies, which are created with the intention of instilling the habit of saving among their members. Despite being non-banking finance firms, Nidhi companies are exempt from the RBI Act's fundamental rules and other NBFC-specific directives.
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