Applicability of Filing Form NFRA-1

Applicability of filing Form NFRA-1

1. Entities Governed by NFRA (Rule 3(1) of NFRA Rule, 2018

a) Companies whose securities are listed on any stock exchange in India or outside India;

b) Unlisted public companies fulfilling any of the following criteria as on the 31st March of immediately preceding Financial Year:

• • having paid-up capital of not less than Rs. 500 crores; or
  • having annual turnover of not less than Rs. 1000 crores; or
  • having in aggregate, outstanding loans, debentures and deposits of not less than Rs. 500 crores.

c) Insurance companies, banking companies, companies engaged in the generation or supply of electricity, companies governed by any special Act or bodies corporate incorporated by an Act in accordance clauses (b), (c), (d), (e) and (f) of section 1(4) of the Act;

d) Body corporate/companies/persons or any class of them referred by Central Government to the Authority in public interest;

e) Foreign subsidiary(ies) and associate(s) of:
i. of the company or body corporate registered in India as referred in point (a) to (d)above; and
ii. income or net worth exceeds 20% of the consolidated income or consolidated networth of such company or the body corporate. Such associates and subsidiaries.

Hereafter the foreign subsidiary(s) and associate(s) mentioned in Clause (e) is referred to as “Foreign Material Subsidiary(s) and Associate(s)”

2. Reporting Requirements under Rule 3(2) and Rule 3(3)

• • Rule 3(2): Every existing body corporate other than a company governed by these rules, shall inform the Authority within thirty days of the commencement of these rules, in Form NFRA-1, the particulars of the auditor as on the date of commencement of these rules.
• • Rule 3(3): Every Body corporate, other than a company as defined in clause (20) of section 2, formed in India and governed under this rule shall, within fifteen days of appointment of an auditor under sub-section (1) of section 139, inform the Authority in Form NFRA-1, the particulars of the auditor appointed by such body corporate.

3. Applicability Chart – https://taxguru.in/corporate-law/faqs-filing-nfra-1-form.html

# A foreign material subsidiary & Associate and has business in India, needs to file NFRA-1 form w.r.t. its operations in India.

4. Inferences

a) Rule 3(2) requires every body corporate other than a company governed by the Rules to file Form NFRA-1 on one-time basis. On a plain reading it seems that all companies incorporated in India shall file the said Form except the companies actually governed by the Rules. However, the purpose of filing NFRA-1 is to inform the particulars of the auditors to the Authority, which are anyway provided by the Indian companies in e-Form ADT-1 under section 139 of the Act (same has been clarified in the FAQ provided by NFRA).

Hence, every the body corporate (other than Indian companies) which are not falling under the provisions of Rule 3(1), shall comply with the one-time filing requirements.

b) Rule 3(3) requires every Body corporate formed in India and governed under these Rules to file Form NFRA- 1 within 15 days of appointment of an Auditor.

Conditions to be satisfied are;
i. The Body corporate shall be ‘formed in India’ and
ii. ‘Governed under this Rule ‘ – Such body corporate falls under the class of entities specified under Rule 3(1) and
iii. It shall not be a company as defined under Section 2(20) of the Companies Act, 2013

Hence, every the Indian body corporate (other than Indian companies) which falls under Rule 3(1) shall file Form NFRA- 1 within 15 days of appointment of an Auditor.

c) Proviso to Rule 3(3): The Foreign Material subsidiary(s) and associate(s) referred above shall provide the details of appointment of the Auditors in Form NFRA-1. And NFRA has clarified from its FAQs that, those Foreign Material subsidiary(s) and associate(s) which are having business in India shall only have to file Form NFRA-1.