## CARO 2020 – Clauses 12 to 16
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### Clause 12: Nidhi Company
(Applies only to Nidhi companies)
| Reporting Requirement |
|---|
| Whether Net Owned Funds (NOF) to deposits ratio of 1:20 has been complied with |
| Whether the company maintains 10% unencumbered term deposits as specified in Nidhi Rules (to meet liabilities) |
| Whether there have been any defaults in repayment of deposits or payment of interest, with details |
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### Clause 13: Related Party Transactions (Sections 177 & 188)
Report on:
- Whether all compliances under Sections 177 and 188 have been made
- Whether details have been disclosed in the FS as required by Accounting Standards
| Section | Subject |
|---|---|
| Section 177 | Audit Committee's approval of related party transactions |
| Section 188 | Board/Shareholder approval of related party contracts/arrangements |
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### Clause 14: Internal Audit
Two separate requirements:
1. Whether the company has an internal audit system commensurate with the size and nature of its business
2. Whether the reports of the internal auditor were considered by the statutory auditor
> 'Commensurate' is a qualitative judgment — an MNC cannot have a token internal audit function.
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### Clause 15: Non-Cash Transactions (Section 192)
Report on:
- Whether the company has entered into any non-cash transactions with directors or persons connected with him
- If yes — whether the provisions of Section 192 have been complied with
> Section 192: Requires valuation of non-cash consideration in transactions with directors and disclosure/approval requirements.
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### Clause 16: RBI Registration (Section 45-IA of RBI Act)
| Reporting Requirement |
|---|
| Whether registration under Section 45-IA of the RBI Act, 1934 is required, and if so, whether obtained |
| Whether company has undertaken non-banking financial or housing financial activities without a valid Certificate of Registration (CoR) from RBI |
| Whether the company is a Core Investment Company (CIC) as defined by RBI |
| If CIC — whether it fulfils the RBI criteria |
| Whether the group has more than one CIC — if yes, indicate the number |