-After the Satyam scandal took place in 2009, the concept of the National Financial Reporting Authority (NFRA) was introduced. Companies Act, 2013 then gave the regulatory framework for its composition and constitution. The Union Cabinet approved the proposal for its establishment on 1 March 2018.
–NFRA has made it mandatory for certain ‘body corporates’ to file with it the details of their auditor appointments by July 31 in Form NFRA-1. However, none of the companies registered under the Companies Act, 2013, will be covered by this norm, they added.
-The Authority shall have power 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 following class of companies and bodies corporate, namely:-
RULE 3(1) : CLASSES OF COMPANIES AND BODIES CORPORATE GOVERNED BY THE AUTHORITY (NFRA):
(a) companies whose securities are listed on any stock exchange in India or outside lndia;
(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 net worth of such subsidiary or associate company exceeds twenty per cent. of the consolidated income or consolidated net worth of such company or the body corporate, as the case may be, referred to in clauses (a) to (d).
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 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.
WHO ARE REQUIRED TO FILE FORM NFRA-1:
# Every existing body corporate governed under Rule 3(1)(c), (d) & (e) of NFRA Rules, 2018. (Excluding Companies as defined under Sub-section (20) of Section 2 of the Companies Act, 2013 (the Act) has to file.
#‘existing body corporate’ can be construed as a body corporate existing as on the commencement of the NFRA Rules (i.e., 13.11.2018).
Rule 3(1)(c) covers bodies corporate incorporated by an Act in accordance with sub-section (4) of section 1 of the Act.
#Rule 3(1)(e) covers foreign body corporate, 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) of Rule 3(1), 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.
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.
DETAILS/DOCUMENTS REQUIRED TO FILE WITH FORM NFRA-1
In case of Indian Body Corporate:
-PAN of Indian authorized individual
-PAN of body corporate
-DIN of Director/Membership No. of CS/PAN of Manager or CEO or CFO
-Income tax PAN of auditor/audit firm
-Membership number of auditor/auditor firm registration number
-In case the auditor is appointed due to casual vacancy,then membership no. of auditor or registration no.
of audit firm who/which vacated the office needs to be provided in the form.
-Copy of written consent given by auditor & Copy of resolution passed by the body corporate
-Digital Signature (DSC) of User (Director/Manager/CEO/CFO/Company Secretary)
In case of Foreign Body Corporate
-Passport Number of foreign authorized individual
-Registration number of foreign body corporate and name of provider of registration number
The Form NFRA-1 is available on www.nfra.gov.in. The said form is not like any other e-Form as available on MCA portal. It has to be filled in online only.
Author Bio
Details given under para “WHO ARE REQUIRED TO FILE FORM NFRA-1” is differing with the rules.