[BREAKING] ICAI notifies Aggregation of CA Firm LLPs Guidelines [Read Notification]

The Institute of Chartered Accountants of India (ICAI) has notified the guidelines for aggregation of existing Chartered Accountant FIrms (CA Firms), taking the next step in the suggestion put forward by the Finance Minister.

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The notified guidelines govern the aggregation of Limited Liability Partnerships (LLPs) involving Chartered Accountants (CAs).

Key Definitions:

• Institute/ICAI refers to the governing body of Chartered Accountants in India.
• LLP refers to Limited Liability Partnerships registered with the ICAI.
• Parent LLP consists of more than 50% CAs as partners and admits another LLP as a partner.
• Partner LLP also consists of more than 50% CAs and joins another LLP.

Eligibility:

1. Full-time practicing CAs or LLPs with over 50% CA partners can form or join an LLP, ensuring at least two practicing CAs at any time.
2. The majority criteria of 50% is based on both the number of partners and their share in profits.
3. Partner LLPs can only partner with one Parent LLP, and vice versa.

Governing Provisions: The formation of the LLPs is regulated under the Chartered Accountants Act, 1949, the LLP Act, 2008, and related circulars.

Naming Clause: When four Indian LLPs, each with over 50% CA partners, join together, they can form a new LLP. The name approval process will align with existing ICAI regulations and the LLP Act.

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Registration: The LLPs must register with ICAI, and a unique registration number will be issued for their combined entity.

Practice:

1. The Board of Management will be led by authorized managing partners and will oversee operations, compliance, strategic decisions, and disputes.
2. No rotation of audits or joint audits between partner LLPs will be allowed.
3. Partner LLPs can practice independently but must adhere to the terms outlined in their agreement.

Characteristics: The guidelines enable partner LLPs to pool resources, operate under common policies, and use shared technology, provided these actions comply with the CA Act and ICAI Code of Ethics.

Reconstitution: Changes in LLP partners must be registered, and the LLP’s continuity, rights, and obligations remain unaffected, even with partner changes.

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Exit/Closure: The guidelines specify the processes for exiting as a partner or closing an LLP according to ICAI and regulatory rules.

Miscellaneous:

• A Doc Locker system will be provided for secure document storage and access.
• A Grievance Redressal Cell will address emerging issues.
• Under the guidelines, only individuals or LLPs with over 50% CA partners are eligible; body corporates (e.g., companies) cannot be partners in a parent LLP.

To Read the full text of the Order CLICK HERE

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