Nidhi Company rules and regulations you should be aware of to oversee the Nidhi Companies post-amendment in Companies Act 2013. A Nidhi Company is a form of NBFC incorporated with the intent to implant the habit of thrift and saving, among the members for their mutual benefit. The incorporation of Nidhi Company takes place under Section 406 of the Companies Act, 2013.

Nidhi Company Rules and Regulations you should be aware of while Concerning Incorporation of Nidhi Company.

• According to the Nidhi Rules, 2014, a Nidhi Company must register as a public company.

• A minimum paid-up equity share capital of five lakh INR is required.
• The Nidhi Company's name must include the words 'Nidhi Limited.'
• According to the Companies Act of 2013, Nidhi Companies cannot issue preference shares.
• The Nidhi Memorandum Companies must state that their objectives must focus on the development of saving habits among their members, as well as the acceptance of deposits from and lending to their members for mutual benefit.
• To be registered as a Nidhi Company, a Company must have a minimum of three directors and seven shareholders.
• Nidhi Company must acquire 200 members within a one-year period of establishment.
• Net Owned Funds must be at least ten lakh rupees. Net Owned Fund is a mix of free reserves and paid-up equity share capital.
• Deposits must not exceed 20 times the amount of Net Owned Funds.
• According to the Nidhi Rules of 2014, unencumbered term deposits must equal or exceed 10% of all outstanding deposits.

Nidhi Company Rules and Regulations - Adhering to the Annual Compliances

• Form NDH-1– The Return of Statutory Compliances is included in this form. A Nidhi Company must file NDH-1 together with the required fees within 90 days of the first financial year's end. This form must be duly certified by a Company Secretary or a practicing Chartered Accountant.

• Form NDH-2- The purpose of this Form is to extend time. Within 30 days of the first financial year's end, Form NDH-2 should be submitted to the Regional Director. Furthermore, per the Nidhi Rules, 2014, you must file NDH-2 with the required fees. After receiving the application, the regional director will review and analyse it before issuing orders in no more than 30 days. If your company fails to meet certain requirements, such as maintaining a NOF to deposit ratio of 1:20 and having at least 200 members by the end of the first year of Nidhi Company Registration in India, you must file this form.
• Form NDH-3– It's a request for a half-yearly refund. You must file NDH-3 along with the necessary fees with the Registrar of Companies within 30 days of the half-year close. A CA in practice, a Cost Accountant, or a Company Secretary must also submit the form.
• Form NDH-4– Under the Nidhi Amendment Rules, 2019[1], the Indian government has developed a new compliance form. Companies can apply for Nidhi status after filing NDH-4. If a corporation does not follow the Nidhi Rules, it will lose its Nidhi designation and be kicked out of the zone. For all new Nidhi Companies, the deadline for filing Form Nidhi-4 is sixty days after the year-end from the date of incorporation. On the other hand, the due period for filing Form Nidhi-4 for existing Nidhi Companies is one year from the date of incorporation or six months from the initiation date of the Nidhi Rules, 2019, whichever comes first.

Restrictions and Prohibitions on Nidhi Company (Nidhi Rules 2014- Rule 6)

• No Nidhi Company should perform business operations other than lending and borrowing business in their own name.

• None of the Nidhi Companies should start a current account with their members.
• No Nidhi Company should conduct the business, such as hire purchase finance, insurance/acquisition of securities issued by any of the body corporates, chit fund, and leasing finance.
• No Nidhi Company shall be involved in the issuance of preference shares and debentures along with other debt instruments in any name.
• None of the Nidhi Companies should go ahead for deposit acceptance or lending to any party or individual other than their members/shareholders.
• No Nidhi Company should become a part of the partnership agreement related to borrowing or lending actions.
• No Nidhi Company should pledge any asset lodged by the members of the Nidhi Company as securities.
• No Nidhi Company should issue any advertisement in any other form for tempting deposits.
• No Nidhi Company needs to acquire other companies by buying securities or controlling the Board of Directors of different companies or entering into any arrangement for bringing changes in the management unless a Special Resolution gets passed in a general meeting and acquired the approval from the associated Regional Director.
• None of the Nidhi Companies should pay any incentive or brokerage for funds deployment or for rendering loans.

Conclusion: 

The Nidhi Company Rules and Regulations are governed by the Ministry of Corporate Affairs (often abbreviated as MCA). The Reserve Bank of India has the authority to issue directions to Nidhi Companies about their acceptance and deposit activities. However, because Nidhi Companies' operations involve the money of its owners, the Reserve Bank of India has specifically exempted this type of company from complying with its essential provisions, such as obtaining RBI registration and so on. Borrowing and lending operations are how Nidhi Companies raise money. Nidhi Company standards and regulations are fairly strict when it comes to forming a Nidhi Company. The Nidhi Rules, 2014, established by the Central Government of India, should be followed by all Nidhi companies.