Background : The Ministry of Corporate Affairs (MCA) has notified the National Financial Reporting Authority Rules, 2018 (the NFRA Rules), 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.
(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 of the Act;
(d) any body corporate or company or person, or any class of bodies corporate or companies 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 associate 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).
1) The following are the two instances for which Form NFRA-1 has to be filed. Viz.,
a. Intimation of particulars of the existing Auditors as on the date of the commencement of the NFRA Rules (i.e., 13.11.2018)-Rule 3(2).
Every existing body corporate governed under Rule 3(1)(c), (d) & (e) of NFRA Rules. (Excluding Companies as defined under Sub-section (20) of Section 2 of the Companies Act, 2013 (the Act) has to file.
When Form NFRA-1 has to be filed: within 30 days from the deployment (deployed on 01.07.2019) of the Form NFRA-1 on the NFRA Portal i.e., 31.07.2019 (Circular No. NF-11/1/2019-O/o Secy-NFRA dated 01.07.2019).
b. Intimation of particulars of appointment of Auditor-Rule 3(3).
i.e., Body Corporate governed under Rule 3(1)(c), (d) & (e) of NFRA Rules. (Excluding Companies as defined under Sub-section (20) of Section 2 of the Act).
When Form NFRA-1 has to be filed: within fifteen days of appointment of an auditor.
Explanation: The following are the reasons for conclusion that Form NFRA-1 has to be filed by Bodis corporate excluding Companies.
Consequence in case of non-compliance
If a company or any officer of a company or an auditor or any other person contravenes any of the provisions of these rules, the company and every officer of the company who is in default or the auditor or such other person shall be punishable as per the provisions of section 450 of the Act. i.e., the company and every officer of the company who is in default or such other person shall be punishable with fine which may extend to ten thousand rupees, and where the contravention is continuing one, with a further fine which may extend to one thousand rupees for every day after the first during which the contravention continues.
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