Rules 21 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Rules 21 to 24 close the Nidhi Rules with the reporting and enforcement chain: a half-yearly return in Form NDH-3, an annual certificate from the auditor, the powers of the Registrar and the Central Government to enforce compliance, and a fine for contravention. This article reads the four rules as amended up to G.S.R. 413(E) dated 16 July 2024; later amendments should be checked. Nidhis that want the returns and certificates prepared can use our compliance documentation support.
Every company covered by rule 2 files Form NDH-3 within thirty days of each half year, certified by a practising CS, CA or cost accountant. The auditor certifies every year that the Rules are complied with, naming any rule that is not. The Registrar may call for information and engage professionals, and the Central Government may appoint a Special Officer after a hearing. Rule 24 prints a fine of up to five thousand rupees, and five hundred rupees a day for a continuing contravention.
Rule 21: the half-yearly return
"Every company covered under rule 2 shall file half yearly return with the Registrar in Form NDH-3 along with such fee as provided in Companies (Registration Offices and Fees) Rules, 2014 within thirty 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."
What the words say:
- Who: every company covered under rule 2, that is, all four classes described in our article on rules 1 and 2. A functioning Nidhi that has not yet been declared is also in rule 2(b).
- What: a half-yearly return in Form NDH-3.
- When: within thirty days from the conclusion of each half year.
- Fee: "as provided in" the Companies (Registration Offices and Fees) Rules, 2014; no amount appears in the Nidhi Rules.
- Certification: by a company secretary, chartered accountant or cost accountant, in each case in practice.
The rule itself does not say which months the half years end in. The current Form NDH-3 (substituted by G.S.R. 35(E) of 20 January 2023) states that "all information shall be furnished for the half year ended 30th September and 31st March of every year". The thirty days therefore run from the end of those half years. We do not compute calendar due dates here.
The form asks about branches opened and closed during the half year, among other particulars. Its contents are described in our article on Forms NDH-1 to NDH-5, and the filing steps are in our post on how to file Form NDH-3.
Rule 22: the auditor's certificate
"The Auditor of the company shall furnish a certificate every year to the effect that the company has complied with all the provisions contained in the rules and such certificate shall be annexed to the audit report and in case of non-compliance, he shall specifically state the rules which have not been complied with."
| Element | What rule 22 says |
|---|---|
| Who gives it | The Auditor of the company |
| How often | Every year |
| What it says | The company has complied with all the provisions contained in the Rules |
| Where it goes | Annexed to the audit report |
| If there is non-compliance | The auditor must specifically state the rules not complied with |
An auditor therefore has to test the company against the whole set of Rules each year, including the amended ones. Rule 19 on auditor rotation is covered in our article on rules 17 to 19.
Rule 23: power to enforce compliance
23(1): the Registrar. "For the purposes of enforcing compliance with these rules, the Registrar of companies may call for such information or returns from Nidhi as he deems necessary and may engage the services of chartered accountants, company secretaries in practice, cost accountants, or any firm thereof from time to time for assisting him in the discharge of his duties."
23(2): the Special Officer, as amended in 2019. G.S.R. 467(E) of 1 July 2019 replaced the words "concerned Regional Director" and "such Regional Director", and in the proviso "Regional Director", with "Central Government". As amended, the sub-rule reads in substance: in respect of any Nidhi which has violated these rules or has failed to function in terms of the Memorandum and Articles of Association, the Central Government may appoint a Special Officer to take over the management of Nidhi, and such Special Officer shall function as per the guidelines given by the Central Government.
The proviso: an opportunity of being heard shall be given to the concerned Nidhi by the Central Government before appointing any Special Officer.
The guidelines for a Special Officer are not part of the Rules and are not covered here.
Rule 24: 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."
| Who | Fine as printed |
|---|---|
| The company | Up to five thousand rupees |
| Every officer in default | Up to five thousand rupees |
| Continuing contravention | A further fine up to five hundred rupees for every day after the first |
The fine is stated as printed. Rule 24 is separate from the penalty provisions of the Companies Act, 2013, which should be checked as in force; see our posts on sections 450 and 451 of the Companies Act, 2013 and section 454 on adjudication.
Several rules also carry their own consequences, for example the bar on Form SH-7 and Form PAS-3 in rule 3A, the bar on fresh deposits in rule 5(4), and the bar on deposits and loans for non-complying companies in rules 3A and 23A; see our article on rules 23A and 23B.
An example
Anita Nidhi Limited closes its half year on 30 September. Within thirty days from the conclusion of that half year it files Form NDH-3 with the Registrar, with the fee provided in the Companies (Registration Offices and Fees) Rules, 2014, and a certificate from a practising company secretary. At year end, its auditor annexes a certificate to the audit report stating that the Rules have been complied with, or, if the NDH-3 for one half year was filed late, naming rule 21 as the rule not complied with. If a half-yearly return is filed late, rule 24 allows a fine on the company and on every officer in default, and a further fine for each day after the first on which the contravention continues.
Need help with NDH-3 and the auditor's certificate?
A late or wrong half-yearly return can carry the fine in rule 24, and a missing rule-wise certificate leaves the audit report incomplete. Our compliance documentation team can prepare the NDH-3 working and support the professional certification.
Key takeaways
- Form NDH-3 within thirty days of each half year (ending 30 September and 31 March per the form), certified by a CS, CA or cost accountant in practice.
- The auditor's annual certificate of compliance is annexed to the audit report and must name any rule not complied with.
- The Registrar may call for information and engage professionals; the Central Government may appoint a Special Officer after giving the Nidhi a hearing.
- Rule 24 prints a fine of up to five thousand rupees for the company and each officer in default, and up to five hundred rupees a day for a continuing contravention.
- The penalty provisions of the Act as in force should also be checked.
Read next
- Rules 23A and 23B: older Nidhis and Form NDH-4
- Forms NDH-1 to NDH-5: what each form asks for
- How to file Form NDH-3: Nidhi half-yearly return
- Section 450 and 451: default penalty
Disclaimer: Based on the Nidhi Rules, 2014 as notified (G.S.R. 258(E), 31 March 2014) and as amended by G.S.R. 467(E) of 2019, G.S.R. 81(E) and 114(E) of 2020, G.S.R. 301(E) of 2022, G.S.R. 35(E) of 2023 and G.S.R. 413(E) of 2024, as consulted on 3 October 2026. Later amendments, fees, forms and the Companies Act, 2013 provisions referred to should be checked. This article is general information, not legal advice; check the official text before acting.