The Government has notified the National Financial Reporting Authority (Manner of appointment and other terms and conditions of service of Chairperson and members Rules, 2018.
The rules prescribes provisions relating to composition of Authority, manner of appointment, Procedure for inquiry of misbehavior of incapacity of the chairperson or a member, Term of office and Salary & allowances etc.
1.Composition of Authority.-
(1) The Authority shall consist of the following
persons to be appointed by the Central Government, namely:-
(a) a chairperson;
(b) three full time members; and
(c) nine part time members.
(2) The chairperson shall be a person of eminence, ability, integrity and standing and
having expertise and experience of not less than twenty-five years in the field of
accountancy, auditing, finance or law.
(3) A full-time member shall be a person of ability, integrity and standing and having
expertise and experience of not less than twenty years in the field of accountancy,
auditing, finance or law.
4) The chairperson and all members, before being appointed, shall submit a
declaration to the Central Government confirming that they have no conflict of interest
or lack of independence in respect of such appointment as chairperson or members in
Form I annexed to these rules, failing which their appointment shall not be considered.
(5) The chairperson and full-time members, shall not be associated with any audit firm
including related consultancy firms during the course of their appointment and two years
after ceasing to hold such appointment.
(6) A part-time member shall be a person who shall not, have any such financial or
other interest as is likely to affect prejudicially his functions as a part-time member.
2. Manner of appointment.-
(1) The Central Government shall appoint the chairperson and a full time member referred to in rule 3 on the recommendation of a search-cum-selection committee consisting of
(a) Cabinet Secretary – Chairperson;
(b) Additional Principal Secretary to the Prime Minister – Member;
(c) Secretary – Ministry of Corporate Affairs- Member;
(d) Chairperson, National Financial Reporting Authority (for selection of full-time
members) – Member;
(e) three experts of repute from a panel of experts in the field of accountancy,
auditing, finance, law (to be nominated by the Central Government) – Members
(2) The Secretary, Ministry of Corporate Affairs shall be the convener of the search-
(3) The search-cum-selection committee shall determine its procedure for making its
(4) No appointment of chairperson or a full time member shall be invalid merely by
reason of any vacancy or absence in the search-cum-selection committee.
(5) The search-cum-selection committee shall make its recommendations in regard to
appointment of chairperson or the members, as the case may be, to the Central
Government within a period not exceeding one hundred and twenty days from the date of
reference made to it by the Central Government.
(6) The following persons shall be appointed as part time members of the Authority
(i) one member to represent the Ministry of Corporate Affairs, who shall be an officer
not below the rank of Joint Secretary, ex-officio;
(ii) one member to represent the Comptroller and Auditor General of lndia, who shall
be an officer not below the rank of Accountant General or Principal Director, ex-
(iii) one member to represent the Reserve Bank of India, who shall be an officer not
below the rank of Executive Director, ex-officio;
(iv) one member to represent the Securities and Exchange Board of India, who shall
be an officer not below the rank of Executive Director, ex-officio;
(v) President, Institute of Chartered Accountants of India, ex-officio;
(vi) Chairperson, Accounting Standards Board, Institute of Chartered Accountants of
(vii) Chairperson, Auditing and Assurance Standards Board, Institute of Chartered
Accountants of India, ex-officio; and
(viii) two experts from the field of accountancy, auditing, finance or law.
The chairperson or a member may, by writing under his hand
addressed to the Central Government, resign from his office at any time:
Provided that the chairperson or member shall, unless he is permitted by the Central
Government to relinquish office sooner, continue to hold office until the expiry of three
months from the date of receipt of such notice or until a person duly appointed as a
successor enters upon his office or ‘until the expiry of his term of office, whichever is the
4. Removal from office.-
(1) The Central Government may, on the recommendation
of a Committee referred to in sub-rule (1) of rule 4, remove from office the chairperson
or a member, who-
(a) has been adjudged as an insolvent; or
(b) has been convicted of an offence which, in the opinion of the Central Government,
involves moral turpitude; or
(c) has become physically or mentally incapable of acting as the chairperson or
(d) has acquired such financial or other interest as is likely to affect prejudicially his
functions as the chairperson or member; or
(e) has so abused his position as to render his continuance in office prejudicial to the
Provided that the chairperson or the interested member shall not be the member of
such Committee, where the subject matter of the cause is against him.