Overview

The fund company is a type of non-banking financial company aka NBFC. It is also known as Mutual Benefit Finance Company due to the benefits provided by the fund company. Like every company, the fund company also has some annual compliance, known as fund company supplements. Statutory compliance related to the fund company is disclosed in the Funding Rules 2014 and the Companies Act 2013.

Provisions of the Section 406(1) of the Companies Act, 2013 defines the Nidhi Company as “A company which has been incorporated as a Nidhi with the object of cultivating the habit of thrift and savings amongst its members, receiving deposits from, and lending to, its members only for their mutual benefit.”

Nidhi Company is the perfect choice for those who want to indulge in lending business with minimum fund investment.

Complaints

• Compliances help in forming exact insights about the company’s working performance.
• It is necessary for every company which is registered under the Companies Act 2013 to file for the compliances.
• Apart from this, the fund company falls under the category of public company so it becomes mandatory for the fund company to follow the compliance to protect the interests of its stakeholders.

Benefits

• Easy Build
• 1. A total of 7 persons, where 3 will be appointed as directors, can form a fund company
• 2. Hassle-free registration process
• 3. It will take 10-15 days to register
• Cost efficient registration The minimum capital requirement for registration of a fund company is Rs.5,000,000. The company also offers an opportunity to invest capital within 2 months after registration.

   

• There is no RBI regulation

  Though the fund company falls under the norms of NBFCs, they do not require approval from RBI. The Funding Rules, 2014 are formulated for such companies to regulate their activities and working performance.

• The company has a high degree of certainty

  The primary objective of the fund company is to promote the habit of saving among its member. Therefore, the fund company can be counted as a long-term investment because its members will never stop saving.

• Low Level of Risk

  The level of risk involved in the fund company is minimal due to its nature of accepting deposits and providing loans to its members as stated in the Fund's Rules 2014. This is a reliable and secure lending method, with loans provided to members at a very low rate.

Important Dates

Pre-incorporation complaints

The required compliance to be followed is:

• A minimum of seven members can form a fund company, out of which three are appointed as directors of the company
• The fund company can come into existence with a minimum share capital of Rs.5,00,000.
• If the preferences are issued in the case, they are to be redeemed according to the same conditions as the problem.
• A minor cannot be considered a member of the fund company
• Company must have “Nidhi Limited” in its name.
• Minor cannot be a member of a funding company
• A trust or a corporate body cannot be a member of a fund company
• Cannot accept stores of more than 20% net owned fund.
• The fund company cannot open branches if it fails to earn any profit after valuation for sequential three paisa related years.
• The rate of interest on credit shall not exceed 7.5% against the most notable speed of intrigue given on deposits.

Post-incorporation complaints

• The number of members should not be less than 200 within one year of its inclusion
• The net should have a fund of Rs. 10 lakh or more.
• The ratio of net-pass funds in stores should not exceed 1:20.
• As mentioned in Rule 14 of the Funding Rules, 2014, the outstanding deposits at the shops should not be less than 10%.
• Support of books of accounts.
• Maintain a legal register.
• Gather constitutional meetings.

Penalty

Timely compliance of documentation is required for each funding organization. Failure to hold an equivalent meeting may result in punishment for fund bank operators.

If the company is negligent in meeting compliance, a fine of Rs 5000 will be imposed on the substance and the concerned authorities.

If the violation increases, further penalty will be Rs 500 continuously.

Consequently, it is important to take compliance maintenance administration from industry master experts.

Annual complaints for the fund company

The nature of annual compliance is periodic in nature. Often these compliance are presented annually so there is a need to file them after regular intervals of time.

The purpose of these compliance is to give a clear picture of the working status and performance of the fund company over a period.

The fund is required for the company to meet all the compliance mentioned in the Companies Act 2013 as well as the Fund Rules 2014.

Annual compliance list for the fund company

• NDH-1

  Filing of NDH-1is required for fund companies, depositing NDH-1 with prescribed fees and ensuring that it is duly certified by either a Chartered Accountant, Cost Accountant or Company Secretary.

  File a return within 90 days, starting on the last date of the first or second financial year after your inclusion.

• NDH -2

  The purpose of filing for Form NDH-2 is to appeal to request for extension of time in case of the following compliance: The following have not been found:

  1. Fails to add a minimum of 200 members in a financial year

  2. 1:20

  Inability to hold net ownership fund to deposit ratio

  The NDH-2 form is submitted to the Regional Director with the prescribed fee; Directors can accept this and P.A.S.s orders within 30 days from the date of receiving application.

• NDH-3

  It’s a half-yearly return form which is filed by the Nidhi Company.

• Maintaining Books of Accounts

  Each Nidhi organization needs to guarantee that it will keep accurate books of accounts.

• Maintain Statutory Register

  As per Companies Act 2013 it is essential for Nidhi Company to maintain statutory registers. It is one of the mandatory compliances for a Nidhi Company.

• Convene Statutory Meetings

  Conducting meeting of Board of Directors and Shareholders

• Preparation of Financial Statements Maintaining books of accounts

  Every fund organization needs to guarantee that it will keep accurate books of accounts.

• Maintain a statutory register

  As per the Companies Act 2013, it is necessary for the company to maintain a statutory register. This fund is one of mandatory compliance for the company.

• Call statutory meetings

  Board of Directors and Shareholders Meeting

• Preparation of Financial Statements

  Financial statements of a Company include Profit & Loss Account, Balance Sheet and Cash Flow Statement, it is compulsory for a Nidhi company to prepare financial statements

• Income Tax Return

  The fund company should file an annual income tax return by September 30 of the next financial year.

• Filling of Financial Statement Returns (AOC-4)

  Form AOC-4 is filled with the subtleties of the company's budget report. This form is retained by other documents that are supporting transferring with this form.

• Filling of Annual Returns (MGT-7-ROC Annual Return)

  The fund company is required to file an annual return with the Ministry of Corporate Affairs (MCA) through Form PTT-7.