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NFRA Amendment Rules 2019

CS Lalit Rajput 
on 09 September 2019

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About Rule(s):

Ministry of Corporate Affairs (MCA), Government of India wide notification dated 05th September, 2019 has amended the National Financial Reporting Authority Rules, 2018, (NFRA Rules). These rules may be called the National Financial Reporting Authority (Amendment) Rules, 2019 {NFRA (Amendments) Rules, 2019}.

NFRA Amendment Rules 2019

Commencement: They shall come into force on the date of their publication in the Official Gazette.

Key Amendments

Sl. No.

Change Particulars

NFRA Rules 2018

NFRA Rules 2019

1.

Rule 2 (1) (g) - Definition of 'Division'

'Division' means a division established by the Authority for the purpose of organizing and carrying out its functions and duties;

'Division' means a division "including the one headed by the chairperson or a full time member", established by the Authority for the purpose of organizing and carrying out its functions and duties;

Rule 3 (1) (c) -

Classes of companies and bodies corporate governed by the Authority.

(explanation inserted for Banking Companies)

No Explanation was given for Banking Companies under NFRA Rules, 2018

"Explanation.-

For the purpose of this clause, "banking company" includes

'corresponding new bank' as defined in clause (d) of section 2 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970) and clause (b) of section 2 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980) and 'subsidiary bank' as defined in clause (k) of section 2 of the State Bank of India (Subsidiary Bank) Act, 1959 (38 of 1959).".

Rule - 5

Annual Return

Form NFRA -2 is available and Due date is 30.11.2019

Every auditor referred to in rule 3 shall file a return with the Authority on or before 30th April every year in such form as may be specified by the Central Government.

Every auditor referred to in rule 3 shall file a return with the Authority on or before "30th November every year in Form NFRA-2 such form as may be specified by the Central Government.

Rule -11

Disciplinary proceedings.

Such provisions not given under NFRA Rules, 2018

New Provisions Added:

"Provided that where the disposal does not take place within the said period, the Division shall record the reasons for not disposing off the show-cause notice within the said period, and the chairperson, may, after taking into account the reasons so recorded, extend the aforesaid period by such additional period not exceeding ninety days as he may consider necessary:

Provided further that the chairperson may, if he thinks fit, grant the said extension

of period more than once.'.

New Annexure i.e. NFRA -2 after Form NFRA-1, inserted

Form was not available at that time.

Form NFRA -2 : Annual Return

Form NFRA -2

Annual Return To Be Filed By Auditor With The National Financial Reporting Authority

Applicable Law(s)

- Section 132 of the Companies Act, 2013 and
- Rule 5 of the National Financial Reporting Authority Rules, 2018

Category of Auditor(s), (reporting required by)

I. Individual
II. Firm
III. Indian LLP
IV. Foreign LLP

Important details required under NFRA -2 from Auditors:

a. Whether the auditor has resigned from his post in any company/body corporate during the past three years?

b. Number of companies/ bodies corporate in which the auditor resigned during the past three years.

 

c. Whether the Auditor has withdrawn an audit report on financial statements, or withdrawn its consent to the use of its name in a report, document, or written communication in the past three reporting periods.

d. Number of companies/ bodies corporate in which such withdrawal took place during the past three years

e. A statement of the quality control policies and procedures of the Auditor for its auditing practice during the reporting period.

Important Links

 

1. Form NFRA-2 is available for understanding at:
http://www.mca.gov.in/Ministry/pdf/NFRA_05092019.pdf

2. NFRA (Amendments), Rules, 2019
http://www.mca.gov.in/Ministry/pdf/NFRA_05092019.pdf

3. NFRA Rules 2018 (Principle Rules)
http://www.mca.gov.in/Ministry/pdf/NFRARules2018_13112018.pdf


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