The Ministry of Corporate Affairs (MCA) has notified the National Financial Reporting Authority Rules, 2018, inter alia, to monitor and enforce compliance with accounting standards and auditing standards, oversee the quality of service under sub-section (2) of section 132 or undertake investigation under sub-section (4) of such section of the auditors of the certain class of companies and bodies corporate.
Classes of companies and bodies corporate governed by the NFRA: (Rule 3)
(a) companies whose securities are listed on any stock exchange in India or outside India;
(b) unlisted public companies having paid-up capital of not less than rupees five hundred crores or having annual turnover of not less than rupees one thousand crores or having, in aggregate, outstanding loans, debentures and deposits of not less than rupees five hundred crores as on the 31st March of immediately preceding financial Year;
(c) insurance companies, banking companies, companies engaged in the generation or supply of electricity, companies governed by any special Act for the time being in force or bodies corporate incorporated by an Act in accordance with clauses (b), (c), (d), (e) and (f) of sub-section (4) of section 1 ofthe Act;
(d) any body corporate or company or person, or any class of bodies corporate or compantes or persons, on a reference made to the Authority by the central Government in public interest, and
(e) a body corporate incorporated or registered outside India, which is a subsidiary or assoctate company of any company or body corporate incorporated or registered in India as referred to in clauses (a) to (d), if the income or networth of such subsidiary or associate company exceeds twenty per cent of the consolidated income or consolidated networth of such company or the body corporate, as the case may be, referred to in clauses (a) to (d).
A company or a body corporate other than a company governed under this rule shall continue to be governed by the Authority for a period of three years after it ceases to be listed or its paid-up capital or turnover or aggregate of loans, debentures and deposits falls below the limit stated therein.
Every existing body corporate other than a company governed by these rules, shall inform the NFRA 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.
Every body corporate, other than a company, formed in India and governed under this rule shall, within fifteen days of appointment of an auditor under sub-section (1) of section ‘t39, inform the NFRA in Form NFRA-1 , the particulars of the auditor appointed by such body corporate: Provided that a body corporate governed under clause (e) of sub-rule (1) shall provide details of appointment of its auditor in Form NFRA-1.
Every auditor (of Companies & body corporate governed by/ referred to in rule 3) shall file a return with the NFRA on or before 30th April every year in such form as may be specified by the Central Government.
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