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Stricter reporting rules for Nidhi cos

Stricter reporting rules for Nidhi cosPremium
Stricter reporting rules for Nidhi cos

Upgraded forms available on the portal for filings are more structured and comprehensive. Experts said that certain documents, certifications and declarations which were optional earlier have now been made compulsory. The idea is to ensure full disclosure, transparency and accountability with respect to Nidhi companies

The government has tightened disclosure norms for Nidhi companies as part of a new reporting framework for this category of non-bank lenders, an official order showed.

The new framework in the revamped compliance portal MCA21, effective from Monday, streamlines the filings these entities have to make such as statutory compliance report, request for seeking more time for certain compliance requirements, half yearly returns and declaration of status as a Nidhi company.

Upgraded forms available on the portal for filings are more structured and comprehensive. Experts said that certain documents, certifications and declarations which were optional earlier have now been made compulsory. The idea is to ensure full disclosure, transparency and accountability with respect to Nidhi companies, they said.

According to Sonam Chandwani, managing partner at law firm KS Legal & Associates, the new web-based forms have replaced the old forms. Forms NDH 3 (return for the half year ended) and NDH 4 (for filing application for declaration as Nidhi company and for updation of status) require more detailed information to be provided about deposits, profits and bank details," explained Chandwani. Experts also said that in the new return for statutory compliances (form NDH- 1), companies need to provide breakup of all deposits with banks which was not mandatory before and in form NDH-4 pertaining to application for declaration as Nidhi company and updation of status, declaration by promoters and directors of the company have been made mandatory.

Separately, the ministry has also notified a new form for companies to report their registered office. The Companies (Accounts) Amendment Rules, 2023 brings changes to the form used to notify the address where a company’s books of accounts will be maintained.

“Under the new rules, it is now mandatory to submit proof of the address, copies of utility bills and a photograph of the registered office, which must include at least one director, along with form AOC-5. Previously, only a board resolution was required. These changes will take effect on 23 January, 2023," explained Chandwani.

The ministry is currently in the process of upgrading its compliance portal, after which a new e-adjudication facility will be introduced. The upgrade is part of a major overhaul of the statutory filing system for the corporate sector, aimed at having better oversight of compliance and the general adherence to corporate governance. The new system for filing statutory documents have greater security features and ensures that only authorized personnel can operate a company’s account with the portal. Version three of the MCA21 portal also allows the government to assess the trends in the corporate sector for quick intervention with policy and administrative measures.

ABOUT THE AUTHOR

Gireesh Chandra Prasad

Gireesh has over 22 years of experience in business journalism covering diverse aspects of the economy, including finance, taxation, energy, aviation, corporate and bankruptcy laws, accounting and auditing.
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