The Institute of Chartered Accountants of India (ICAI) has written to the Ministry of Corporate Affairs (MCA) suggesting that at least three independent practising chartered accountants-cum-auditors should be included in the 15-member governing body of the National Financial Reporting Authority (NFRA), as part of a wider set of suggestions submitted on the Corporate Laws (Amendment) Bill, 2026. The government is expected to bring the revised legislation in the November-December Winter Session, incorporating the parliamentary panel's recommendations.
The body has also suggested that NFRA should continue to function as an authority under the Central government through the MCA rather than being constituted as a separate body corporate. The Joint Parliamentary Committee examining the Bill has already submitted its report, with the government expected to incorporate the recommendations before introducing the revised legislation. As confirmed by ICAI officials, majority of the suggestions have been accepted by the government and they are still working on the Bill.
It has also recommended that NFRA's powers and functions be exercised with the approval of its governing body to ensure collective decision-making and institutional accountability. Meanwhile, ICAI advocated strongly that the rule-making powers should remain with the Central government, while the legislation should clearly define the scope of NFRA's delegated powers and directions.
As per the media reports, the Joint Parliamentary Committee, constituted for the Corporate Laws (Amendment) Bill, has already cautioned the MCA to ensure that amendments to the Companies Act shouldn’t overpower NFRA jurisdiction to an extent that could dilute the statutory autonomy granted to ICAI under the Chartered Accountants Act, 1949.
Regarding the regulatory proceedings, ICAI has sought a five-year limitation period for initiating investigations by NFRA, arguing that a defined timeframe would provide greater certainty and finality.
ICAI has further sought a clear appellate mechanism against NFRA orders, proposing that appeals should lie before the National Company Law Tribunal (NCLT) or National Company Law Appellate Tribunal (NCLAT), with a stay available during the pendency of an appeal. The institute has also recommended widening the settlement mechanism under the Companies Act to cover penalties imposed by NFRA, so that similar regulatory proceedings receive uniform treatment.
Regarding decriminalisation, ICAI has said that failure to pay an NFRA penalty should not result in imprisonment.
The Bill, introduced in the Lok Sabha in March has been referred to a Joint Parliamentary Committee, which is consulting ICAI and other professional bodies for the suggestions.
