A guide for filing of NDH-1 and NDH-2
Understanding Rule 5 of Nidhi Rules, 2014
There are many ambiguities in market about post registration requirements of Nidhi Companies, as we know Nidhi Companies are regulated by Ministry of Corporate Affairs, Section “406” of Companies Act 2013 and Companies Nidhi Rules, 2014 govern Nidhi companies.
Reserve Bank of India is also empowered to issue directions to them in matters relating to their deposit acceptance activities, However as Nidhi Companies only accept/lend funds only from/to its members, RBI has exempted Nidhi Companies from the core provisions or regulations applicable on NBFC.
Nidhi Rules, 2014 are key drivers of governance of Nidhi Companies operations and compliances, these rules provide a wide guideline for Nidhi Companies for pre and post incorporation requirements.
In this article we’ll discuss about Rule “5” (Nidhi Rules, 2014), It deal with requirements for minimum number of members, Net owned funds etc. Nidhi Companies are required to comply with the conditions prescribed under the rule’5.
Rule “5”
This rule stat that every Nidhi shall, within a period of one year FROM THE OMMENCEMENT OF THESE RULES, ensure that it has-
(a) Not less than two hundred members.
(b) Net Owned Funds of Ten lakh rupees or more
(c) Unencumbered term deposits of not less than ten per cent of the outstanding deposits as specified in Rule 14
(d) Ratio of Net Owned Funds to deposits of not more than 1:20.
(Now here rules are saying ‘one year from commencement of these rules’ not ‘one year from incorporation)
(2) Within ninety days from the close of the first financial year after its incorporation and where applicable, the second financial year, Nidhi shall file a return of statutory compliances in Form NDH-1 along with such fee as provided in Companies (Registration Offices and Fees) Rules, 2014 with the Registrar duly certified by a company secretary in practice or a chartered accountant in practice or a cost accountant in practice.
(3) If a Nidhi is not complying with clauses (a) or (d) of sub-rule (1) above, it shall within thirty days from the close of the first financial year, apply to the Regional Director in Form NDH-2 along with fee specified in Companies (Registration Offices and Fees) Rules, 2014 for extension of time and the Regional Director may consider the application and pass orders within thirty days of receipt of the application.
(4) If the failure to comply with sub-rule (1) of this rule extends beyond the second financial year, Nidhi shall not accept any further deposits from the commencement of the second financial year till it complies with the provisions contained in sub-rule (1), besides being liable for penal consequences as provided in the Act.
Highlights from Rule 5
Every Nidhi Company required to file NDH-1
NDH-1 is one time statutory compliance form
Nidhi Companies shall file this form within ninety days from the close of the first financial year after its incorporation and where applicable, the second financial year.
If a Nidhi failed to complying with clauses (a) or (d) of sub-rule (1) above, it shall file NDH-2 within thirty days from the close of the first financial year.
If Nidhi company failed to comply with rule 1 even after one year extension from RD, Nidhi shall stop accepting all kind of deposits.
NDH-3 requires certification from a company secretary in practice or chartered accountant in practice or cost accountant in practice.
Information required for preparation of NDH-1
Corporate Identity Number (CIN) of Nidhi Company.
Details of subscriber to the memorandum.
Details of members admitted since date of incorporation up to the end of the first financial year
Details of members who have ceased to be members up to the end of the first financial year
Details of Paid-up equity share capital, Free reserve, Accumulated losses.
Details of outstanding deposits.
Details of total unencumbered term deposits
Attachments for eForm NDH-1
• List of all members with PAN and complete residential address
• Amount of deposit accepted from each member
• Break-up of unencumbered term deposits with bank name, branch and account number
• Break-up of unencumbered term deposits with name and location of P.O branch
Penalty for non-compliance- If a company falling under rule 2 contravenes any of the provisions of the rules prescribed herein, the company and every officer of the company who is in default shall be punishable with fine which may extend to five thousand rupees, and where the contravention is a continuing one, with a further fine which may extend to five hundred rupees for every day after the first during which the contravention continues.
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