CA Multi-Disciplinary Firm: Analysis on Sharing Profit and Fees with Non-CAs

CA Multi-Disciplinary Firm - Sharing Profit and Fees - Non-CAs - taxscan

With the introduction of Multi-Disciplinary firms, the CA firms can rope in cost accountants, company secretaries, actuaries, lawyers,  Software Professionals, Venture Capitalists, Retired Entrepreneurs etc. to offer various services.

ICAI notifies Revised FORM 18 to allows Partnership with  Non-CAs

The Institute of Chartered Accountants of India (ICAI) vide Notification No. 1-CA(7)/197/2021 dated 8th July, 2021 notifies revised format of FORM 18 which is a form to Intimate particulars of office and firms and Changes in the same. Revised form 18 is applicable from 8th July 2021. Regulation by which form is modified is called Chartered Accountants (Amendment) Regulations, 2021. With new regulation ICAI allows Multi Disciplinary Partnership Firms and also allows partnership of CAs with CMAs, Company Secretaries, Advocates, Engineer, Architects, MBA.

Regulation 53A: Sharing profit with non-CAs

The Regulation 53A of the Chartered Accountants Regulations, 1988 prescribes the Sharing profit with non-CAs. The Regulation 53A allows profit-sharing even without entering into a partnership.

The Regulation reads as:

(1) For the purposes of Items (2),(3) and (5) of Part I of the First Schedule to the Act, a person has to be a member of any of the following professional bodies, namely:-

  • The Institute of Company Secretaries of India established under the Companies Act, 1980 (No.56 of 1980);
  • The institute of Cost and Works Accountants of India established under the Cost and Works Accountants Act, 1959 (No.23 of 1959);
  • Bar Council of India established under the Advocates Act, 1961 (No.25 of 1961);
  •  The Indian Institute of Architects established under the Architects Act, 1972(No.20 of 1972);
  • The institute of Actuaries of India established under the Actuaries Act, 2006 (No.35 of 2006).

(2) The membership of the professional bodies or institutions outside India whose qualifications relating to accountancy are recognized by the Council under sub-section (2) of section29 shall also be taken into consideration for the purposes of Items (2), (3), and (5) of Part I of the First Schedule to the Act.(3)   For the purposes of Items (2),(3), (4), and (5) of Part I of the First Schedule to the Act, the following shall be the persons qualified in India, namely:-

  •  Company Secretary within the meaning of the company Secretaries Act, 1980;
  • Cost Accountant within the meaning of the Cost and Works Accountants Act, 1959;
  •  Actuary within the meaning of the Actuaries Act, 2006;
  •  Bachelor in Engineering from a University established by law or an Institution recognized by law;
  • Bachelor in Technology from a university established by law or an institution recognized by law;
  •  Bachelor in Architecture from a University established by law or an institution recognized by law;
  •  Bachelor in Law from University established by law or an institution recognized by law;
  • Master in business administration from Universities established by law or technical institutions recognized by All India Council for Technical Education.

Regulation 53A: Membership of professional bodies for partnership

Regulation 53B is applicable to a CA in practice or a firm of CAs in practice who want to enter into a partnership with members of prescribed professional bodies namely Company Secretary, member, The Institute of Company Secretaries of India, established under the Company Secretaries Act, 1980; Cost Accountant, member, The Institute of Cost and Works Accountants of India established under the Cost and Works Accountants Act, 1959; Advocate, member, Bar Council of India established under the Advocates Act, 1961; Engineer, member, The Institution of Engineers, or Engineering from a University established by law or an institution recognized by law. Architect, member, The Indian Institute of Architects established under the Architects Act, 1972; Actuary Member, The Institute of Actuaries of India, 2006.

Moreover, professional bodies or institutions outside India who qualify relating to accountancy recognised by the council under sub-section (2) of section 29of the Act.

Section 29 talks about the reciprocity:

 (1) where any country, specified by the Central  Government on this behalf by notification in the official Gazette prevents persons of Indian domicile from becoming members of any institution similar to the Institute of Chartered  Accountants of India from practicing the profession of accountancy or subjects them to unfair discrimination in that country, now the subject of any such country shall be entitled to become a member of the Institute or practice the profession of accountancy in India. 

(2) Subject to the provisions of sub-section (1), the Council may prescribe the conditions, if any, subject to which foreign qualifications relating to accountancy shall be recognized for the purposes of entry in the Register.

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