Lok Sabha clips wings of NFRA
Company secretaries, cost accountants exempt from the purview of the new body
The National Financial Reporting Authority (NFRA), proposed to be set up under the new companies bill, saw its wings clipped before it came into being as it was passed with amendments leaving out certain professionals out of its ambit.
The Lok Sabha also put caps on the penalties that can be levied on chartered accountants, the only set of professionals that will be covered by the new body.
The new bill will become law after it is passed in the Rajya Sabha. The upper house is likely to take up the bill in the Budget session early next year after some members demanded time for discussion on the last day of the winter session on Thursday.
As regards the provisions provided for NFRA, post amendments, the NFRA has the power to investigate in the matters of professional or other misconduct committed only by a firm or a member of chartered accountants under the CA Act, 1949.
Further the lower house also capped the penalty for professional or other misconduct to five times of the fees received, in case of individual and ten times of the fees received, in case of firms. Minimum penalty is Rs 10 lakh.
There was no cap on penalty in the original bill.
The amendments also provides that an Appellate Authority constituted by notification by the Central Government will hear appeals arising out of the orders of the National Financial Reporting Authority.
Earlier, there was a provision that allowed the appeals to be heard by the chartered accountants body, Institute of Chartered accountants of India (ICAI).
The qualifications for appointment of the chairperson and members of the Appellate Authority, the manner of selection, the terms and conditions of their service and the requirement of the supporting staff and procedure (including places of hearing the appeals, form and manner in which the appeals shall be filed) to be followed by the Appellate Authority will be as prescribed under the law.
Other key amendments to the bill made in Lok Sabha include a change in the definition of private placement to exclude qualified institutional buyers and allotments to employees under stock option plans.