Monday, December 17, 2018

FEATURE OF NIDHI COMPANY

-:BENEFITS OF NIDHI COMPANY:-


-:BENEFITS OF NIDHI COMPANY:-



2. MANDATORY REQUIREMENTS
  • public Company with a minimum paid up capital of Rs. 5 Lacs
  • Shall not issue preference shares
  • Shall have last words “Nidhi Limited” as a part of its name.
  • Minimum 3 Directors which shall mandatorily be a member of Nidhi Company.
  • Minimum 7 shareholders.

3. MANDATORY REQUIREMENTS AFTER INCORPORATION OF NIDHI COMPANY :
  • Within a period of one year of incorporation, the Nidhi Company has to ensure the following compliances:
  • Minimum 200 members
  • Net owned funds (“NOF”) of at least Rs. 10 lakhs. (Net owned fund means the aggregate of paid-up equity share capital and free reserves as reduced by accumulated losses and intangible assets appearing in the last audited balance sheet)
  • The ratio of NOF to deposits of not more than 1:20.
  • Unencumbered term deposits of not less than 10% of the outstanding deposits


4. RESTRICTIONS FOR NIDHI COMPANY
  • issue preference shares or debt instruments. 
  • open any current account with its members. 
  • acquire any Company by way of purchase of securities or controlling the composition of Directors unless approval has been taken from the Regional Director. 
  • carry on any business other than the business of borrowing and lending its own name. 
  • accept deposits from and lend to anyone else, apart from its members. 
  • Hypothecation any of the assets lodged by its members as security take deposits from any body corporate.
  • into any partnership arrangement in its borrowing or lending activities.
  • advertisement for soliciting the deposit. 
  • pay any brokerage or incentive for mobilizing deposits from members or for granting loans. 
  • levy service charges for issue of its shares or issues less than 10 shares per deposit holder. 
  • grant loans to members exceeding the ceiling as mentioned in the Nidhi Rules, 2014. 
  • A charge rate of interest exceeding 7.5%. 
  • does not declare dividend exceeding 25%
5. DEPOSITS AND ITS ACCEPTANCE

Company shall accept deposits in the following manner:-

  • Shall not accept deposits exceeding twenty times of its NOF. 
  • Fixed Deposits shall be accepted for a period of minimum 6 months to maximum 60 months. 
  • Recurring Deposits shall be accepted for a period of minimum 12 months to maximum 60 months. 
  • Unnumbered Term Deposits: Every Nidhi Company shall invest and continue to keep investing, in unencumbered term deposits with a scheduled commercial bank, or post office deposits in its own name an amount which shall not be less than ten per cent. of the deposits outstanding at the close of business on the last working day of the second preceding month. Further, in case of any unforeseen emergency, the limit of 10% can be withdrawn only after prior approval of the Regional Director.

  • The Director shall not hold office for a term up to ten consecutive years.

  • Shall be eligible for re-appointment only after the expiry of two years from the date of expiry of ten years period.

6. STATUTORY COMPLIANCE:-

The Nidhi Company shall have to adhere to all the provisions and sections as applicable to a Public Company except the provisions that have been specifically exempted for Nidhi Company. Further, instead of Form AOC-4 and MGT-7 that we file for normal Companies, the following forms shall have to file for Nidhi Companies:

    NDH-1:

  • Within 90 days of closure of first financial year after its incorporation certified by a company secretary in practice or a chartered accountant in practice or a cost accountant in practice certifying that the Nidhi Company has duly complied with its post incorporation compliances. 


    NDH-3:

  • Half yearly return shall have to be filed within 30 days from the conclusion of each half year duly certified by a company secretary in practice or chartered accountant in practice or cost accountant in practice. 

  • Auditors Certificate that the Company has requisitely complied with all the provisions of the Act. 

Further, the Income Tax provisions w.r.t. a Nidhi Company and a normal Company are the same.

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