New Delhi: The National Financial Reporting Authority (NFRA) has set up four separate functional divisions, including one for investigation and disciplinary proceedings.
NFRA was set up in 2018 under the Companies Act.
The four separate divisions are for Monitoring & Oversight, Investigation, Determination and Disciplinary, according to an order issued by the regulator.
In February 2025, the Delhi High Court rejected a challenge to the provisions for NFRA's power to investigate and take action against the misconduct of chartered accountants. The court upheld the validity of Section 132 of the Companies Act and the NFRA rules.
However, the court quashed the show cause notices issued to the petitioners and the consequent final orders on the ground that the procedure "clearly lacked attributes of neutrality and a dispassionate appraisal".
The regulator's plea challenging the quashing of the show-cause notices is pending before the Supreme Court.
Against this backdrop, the watchdog has constituted the four divisions.
After assessing whether there is a prima facie case of violation, the Monitoring & Oversight Division will forward the matter to the Investigation Division.
Subsequently, once the probe is over, the Determination Division will consider the findings and refer the matter to the Disciplinary Division, which is presided over by the NFRA Chairperson.
The order, dated April 28, said each division would function independently, and no member of the Executive Board (EB) working in one division would participate in the functioning of another division in a particular case.
As per the order, the creation of the divisions is an "interim measure till the proposed Corporate Law Amendment Bill, 2026, is passed by the Parliament and the Rules/ Regulations made thereafter or till the date of disposal of the present batch of cases by the Supreme Court of India, whichever is earlier...".
NFRA is chaired by Nitin Gupta and has three full-time members -- Smita Jhingran, P Daniel and Sushil Kumar Jaiswal. PTI
NFRA was set up in 2018 under the Companies Act.
The four separate divisions are for Monitoring & Oversight, Investigation, Determination and Disciplinary, according to an order issued by the regulator.
In February 2025, the Delhi High Court rejected a challenge to the provisions for NFRA's power to investigate and take action against the misconduct of chartered accountants. The court upheld the validity of Section 132 of the Companies Act and the NFRA rules.
However, the court quashed the show cause notices issued to the petitioners and the consequent final orders on the ground that the procedure "clearly lacked attributes of neutrality and a dispassionate appraisal".
The regulator's plea challenging the quashing of the show-cause notices is pending before the Supreme Court.
Against this backdrop, the watchdog has constituted the four divisions.
After assessing whether there is a prima facie case of violation, the Monitoring & Oversight Division will forward the matter to the Investigation Division.
Subsequently, once the probe is over, the Determination Division will consider the findings and refer the matter to the Disciplinary Division, which is presided over by the NFRA Chairperson.
The order, dated April 28, said each division would function independently, and no member of the Executive Board (EB) working in one division would participate in the functioning of another division in a particular case.
As per the order, the creation of the divisions is an "interim measure till the proposed Corporate Law Amendment Bill, 2026, is passed by the Parliament and the Rules/ Regulations made thereafter or till the date of disposal of the present batch of cases by the Supreme Court of India, whichever is earlier...".
NFRA is chaired by Nitin Gupta and has three full-time members -- Smita Jhingran, P Daniel and Sushil Kumar Jaiswal. PTI
