Multidisciplinary firms and CS

Company secretary is considered as champion of Corporate laws and have an enviable position in the corporate management. He is a person who is looked on all compliance issues and times need to work closely with other professionals also.

Company Secretaries Act 1980 have a limiting provision in the first schedule, part I. As per The First Schedule, Part I of the Company Secretarial Act, 1980, A Company Secretary in Practice shall be deemed to be guilty of professional misconduct, if he– enters into partnership, in or outside India, with any person other than a Company Secretary in practice or such other person who is a member of any other professional body.

This was creating a real professional hurdle for the development of the profession and its diversification and growth. As in much expected lines, ICSI came with a welcome amendment “Company Secretaries (Amendment) Regulations, 2020”. The Amendment 2020, Institute added Regulation 165A (Multidisciplinary Firm) and made amendment in Regulation 169 with regard to Trade or firm name to require Council approval.

If we look on to the literal interpretation, now a Practicing Member (Certificate Of Practice Holder) of Institute of Company Secretaries of India (ICSI) can enter into partnership with Chartered Accountant, Cost and Works Accountants, Advocates etc.

Provisions in detail

Regulation 168- Company Secretaries in practice not to engage in any other business or occupation

♦A Company Secretary in practice shall not engage in any business or occupation other than the profession of Company Secretary unless it is permitted by a general or specific resolution of the Council.

♦ A Company Secretary in practice may act as a secretary, trustee, executor, administrator, arbitrator, receiver, appraiser, valuer, internal auditor, management auditor, management consultant or as a representative on financial matters including taxation and may take up an appointment that may be made by the Central or any State Government, Court of Law, Labour Tribunals, or any other statutory authority.

B. Regulation 165A – Multidisciplinary Firm

A member in practice may form multi-disciplinary firm with the member of other professional bodies as prescribed under regulations 168A and 168B in accordance with the regulating guidelines of the Council for functioning and regulation of such multidisciplinary firm

C. Regulation 168A – Other Professional bodies

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

♦ The Institute of Chartered Accountants of India

♦ The Institute of Cost and Works Accountants of India

♦ Bar Council of India established under the Advocates Act, 1961

♦ The Indian Institute of Architects established under the Architects Act, 1972

♦ The Institute of Actuaries of India established under the Actuaries Act, 2006

D. THE FIRST SCHEDULE

A Company Secretary in Practice shall be deemed to be guilty of professional misconduct, if he–

♦ (2) pays or allows or agrees to pay or allow, directly or indirectly, any share, commission or brokerage in the fees or profits of his professional business, to any person other than a member of the Institute or a partner or a retired partner or the legal representative of a deceased partner, or a member of any other professional body or with such other persons having such qualifications as may be prescribed for the purpose of rendering such professional services from time to time in or outside India.

♦ accepts or agrees to accept any part of the profits of the professional work of a person who is not a member of the Institute:

♦ secures, either through the services of a person who is not an employee of such company secretary or who is not his partner or by means which are not open to a Company Secretary, any professional business

E. Regulation 168B – of Professional body for Partnership

(1) For the purposes of entering into partnership under clauses (4) and (5) of Part I of the First Schedule to the Act, a person shall be a member of any of the following professional bodies, namely:-:-

♦ The Institute of Chartered Accountants of India

♦ The Institute of Cost and Works Accountants of India

♦ Bar Council of India established under the Advocates Act, 1961

♦ The Indian Institute of Architects established under the Architects Act, 1972

♦ The Institute of Actuaries of India established under the Actuaries Act, 2006

F. THE FIRST SCHEDULE

A Company Secretary in Practice shall be deemed to be guilty of professional misconduct, if he–

♦ enters into partnership, in or outside India, with any person other than a Company Secretary in practice or such other person who is a member of any other professional body having such qualifications as may be prescribed, including a resident who but for his residence abroad would be entitled to be registered as a member under clause (e) of sub-section (1) of section 4 or whose qualifications are recognized by the Central Government or the Council for the purpose of permitting such partnerships;

♦ secures, either through the services of a person who is not an employee of such company secretary or who is not his partner or by means which are not open to a Company Secretary, any professional business

Conclusion:

Combined reading of Regulation 168, 168B, 165A read with First Schedule Part- I clause 4 and 5:

♦(165A) – A member in practice may form multi-disciplinary firm with the member of other professional bodies like:

2. The Institute of Chartered Accountants of India

3. The Institute of Cost and Works Accountants of India

4. Bar Council of India established under the Advocates Act, 1961, Etc.

and enters into partnership, in or outside India, with any person other than a Company Secretary in practice or such other person who is a member of any other professional body (some example mentioned above in regulation 168B).

GUIDELINES FOR NAME APPROVAL OF MULTI DISCIPLINARY FIRM:

Regulation 169(2A)- “(2A) An application in such Form as may be determined by the Council, is required to be made to the Institute for obtaining prior approval of the trade or firm name proposed to be used by the company secretary in practice or by a firm of Company Secretaries in practice or Multidisciplinary Firm.