COP
This query is : Resolved
11 January 2010
Hi Friends
I wish to know that whether a C.A. in practice can accept the appointment as director in a company engaged in the business of broker/ selling and buy shares and mutual funds.
Can a practitioner individual C.A. act as broker.
If a C.A. in practice wishes to commance business of broker in his own name or in the name of his firm, is it permisible?
Pls guide
Thanks
N.B.
I wish to know that whether a C.A. in practice can accept the appointment as director in a company engaged in the business of broker/ selling and buy shares and mutual funds.
Can a practitioner individual C.A. act as broker.
If a C.A. in practice wishes to commance business of broker in his own name or in the name of his firm, is it permisible?
Pls guide
Thanks
N.B.
11 January 2010
General Resolution
(A) Permission granted generally - “Members of the Institute in practice be generally
permitted to engage in the following categories of occupations, for which no specific
permission from the Council would be necessary in individual cases:
1. Employment under Chartered Accountants in practice or firms of such chartered
accountants.
2. Private tutorship
3. Authorship of books and articles.
4. Holding of Life Insurance Agency License for the limited purpose of getting renewal
commission.
5. Attending classes and appearing for any examination.
6. Holding of public elective offices such as M.P., M.L.A. and M.L.C.
7. Honorary office leadership of charitable-educational or other non-commercial
organisations.
8. Acting as Notary Public, Justice of the Peace, Special Executive Magistrate and the like.
9. Part-time tutorship under the coaching organisation of the Institute,
10. Valuation of papers, acting us paper-setter, head-examiner or a moderator, for any
examination.
11. Editorship of professional journals.
12. Acting as Surveyor and Loss Assessor under the Insurance Act, 1938 provided they are
otherwise eligible.
Specific Resolution - “Members of the Institute in practice may engage in the following
categories of business or occupations, after obtaining the specific and prior approval of the
Council in each case:
1. Full-time or part-time employment in business concerns provided that the member and/or
his relatives do not hold “substantial interest†in such concernsâ€.
2. Full-time or part-time employment in non-business cc concern.
62
3. Office of managing director or a whole-time director o a body corporate within the
meaning of the Companies Act, 1956.
4. Interest in family business concerns (including such interest devolving on the members
as a result of in inheritance/succession / partition of the family business) or concerns in
which interests has been acquired as a result of relationships and in the management of
which no active part is taken.
5. Interest in agricultural and allied activities carried on with the help, if required, of hired
labour.
6. Interest in an educational institution.
7. Part-time or full-time lectureship for courses other than those relating to the Institute’s
examinations conducted under the auspices of the Institute or the Regional councils or
their branches.
8. Part-time or full-time tutorship under any educational institution other than the coaching
organization of the Institute.
9. Editorship of journals other than professional journals.
10. Any other business or occupation for which the Executive Committee considers that
permission may be granted.
However, it is open to the Council to refuse permission in individual cases though covered
under any of the above categories. For the purpose of the above resolution:
(i) the expression “relativeâ€, in relation to a member, means the husband, wife, brother or
sister or any lineal ascendant or descendant of that member;
(ii) a member shall be deemed to have a “substantial interest’ in a concern:
(a) In a case where the concern is a company, if its shares (not being shares entitled to
a fixed rate of dividend whether with or without a further right to participate in profit)
carrying not less than twenty percent of voting power at any time, during the
relevant years are owned beneficially by such member or by any one or more of the
following persons or partly by such member and partly by one or more of the
following persons:
(i) one or more relatives of the member:
(ii) one or more partners and/or their relative,
(iii) any concern in which any of the persons referred to above has a substantial
interest;
(b) In the case of any other concern, if such member is entitled or the other persons
referred to above or such member and one or more of the other persons referred to
above or persons of such number and / or are more sections of such persons are
entitled in the aggregate, at any time during the relevant years not less than twenty
per cent of the profits of such concern.
3. Office of managing director or a whole-time director o a body corporate within the
meaning of the Companies Act, 1956.
4. Interest in family business concerns (including such interest devolving on the members
as a result of in inheritance/succession / partition of the family business) or concerns in
which interests has been acquired as a result of relationships and in the management of
which no active part is taken.
5. Interest in agricultural and allied activities carried on with the help, if required, of hired
labour.
6. Interest in an educational institution.
7. Part-time or full-time lectureship for courses other than those relating to the Institute’s
examinations conducted under the auspices of the Institute or the Regional councils or
their branches.
8. Part-time or full-time tutorship under any educational institution other than the coaching
organization of the Institute.
9. Editorship of journals other than professional journals.
10. Any other business or occupation for which the Executive Committee considers that
permission may be granted.
However, it is open to the Council to refuse permission in individual cases though covered
under any of the above categories. For the purpose of the above resolution:
(i) the expression “relativeâ€, in relation to a member, means the husband, wife, brother or
sister or any lineal ascendant or descendant of that member;
(ii) a member shall be deemed to have a “substantial interest’ in a concern:
(a) In a case where the concern is a company, if its shares (not being shares entitled to
a fixed rate of dividend whether with or without a further right to participate in profit)
carrying not less than twenty percent of voting power at any time, during the
relevant years are owned beneficially by such member or by any one or more of the
following persons or partly by such member and partly by one or more of the
following persons:
(i) one or more relatives of the member:
(ii) one or more partners and/or their relative,
(iii) any concern in which any of the persons referred to above has a substantial
interest;
(b) In the case of any other concern, if such member is entitled or the other persons
referred to above or such member and one or more of the other persons referred to
above or persons of such number and / or are more sections of such persons are
entitled in the aggregate, at any time during the relevant years not less than twenty
per cent of the profits of such concern.
Explanation -
(a) The relevant years in the context of Clause (4) of part I of the First Schedule to the
Chartered Accountant Act, 1949 read with Appendix 17 mean the year/period which the
report/certificate relates and the year/period during which the said report/certificate is
signed.
(b) The relevant years in the context of Clause (11) of part I of the First Schedule to the
Chartered Accountants Act, 1949 read with Appendix 10 mean the year/period in which
not less than 20% of voting power/20% share of profits were owned beneficially.
Attention of the members is also invited to para 3 of the above Resolution relating to the
holding of office of a managing director or a whole-time director in a company. In such cases,
a member can accept the office of a managing director or a whole- time director only after
obtaining, the specific and prior approval of the Council. Attention of the members is also
invited to the provisions of Section 2 (26) of the Companies Act, 1956 under which even where
a person is not designated as a managing director or a whole-time director, he can be deemed
to be a managing director or a whole-time director if he is entrusted with the whole or
substantially the whole of the management of the affairs of the company.
It may be pointed out that a member cannot accept and hold the office of a managing director
or a whole-time director in a company if the member and/or his partners and relatives hold
substantial interest in such a company,
The Council has considered the question of permitting members in practice to become a
Director, Managing Director, full time/Executive Director etc. and related issues and the
following decisions have been taken:
As regards the question of permitting member in practice to be a Director, Promoter/Promoter-
Director, Subscriber to the Memorandum and Articles of Association of any company including
a board managed company, it was decided that -
(a) Director of a Company
(i) The expression “Director Simplicitor†means an ordinary / simple Director.
(ii) A member in practice is permitted generally to be a Director Simplicitor in any company
including a board-managed company and as such he is not required to obtain any
specific permission of the council in this behalf irrespective of whether he and / or his
relatives hold substantial interest in that company.
(b) Promoter / Promoter Director - There is no bar for a member to be a promoter /
signatory to the Memorandum and Articles of Association of any company. There ‘s also no
bar for such a promoter / signatory to be a Director Simplicitor of that company irrespective of
whether the object of the company include areas which fall within the scope of the profession
of chartered accounts. Therefore members are not required to obtain specific permission of
the Council in such cases. It must be clarified that under Section 25 of the Chartered
Accountants Act, no company can practise as a chartered accountant.
Item Nos. 4 & 5 of the Specific Resolution would be equally applicable to member carrying out
the activities referred to therein in his capacity as Karta / representative of HUF provided he is
not actively engaged in carrying on such activities.
(A) Permission granted generally - “Members of the Institute in practice be generally
permitted to engage in the following categories of occupations, for which no specific
permission from the Council would be necessary in individual cases:
1. Employment under Chartered Accountants in practice or firms of such chartered
accountants.
2. Private tutorship
3. Authorship of books and articles.
4. Holding of Life Insurance Agency License for the limited purpose of getting renewal
commission.
5. Attending classes and appearing for any examination.
6. Holding of public elective offices such as M.P., M.L.A. and M.L.C.
7. Honorary office leadership of charitable-educational or other non-commercial
organisations.
8. Acting as Notary Public, Justice of the Peace, Special Executive Magistrate and the like.
9. Part-time tutorship under the coaching organisation of the Institute,
10. Valuation of papers, acting us paper-setter, head-examiner or a moderator, for any
examination.
11. Editorship of professional journals.
12. Acting as Surveyor and Loss Assessor under the Insurance Act, 1938 provided they are
otherwise eligible.
Specific Resolution - “Members of the Institute in practice may engage in the following
categories of business or occupations, after obtaining the specific and prior approval of the
Council in each case:
1. Full-time or part-time employment in business concerns provided that the member and/or
his relatives do not hold “substantial interest†in such concernsâ€.
2. Full-time or part-time employment in non-business cc concern.
62
3. Office of managing director or a whole-time director o a body corporate within the
meaning of the Companies Act, 1956.
4. Interest in family business concerns (including such interest devolving on the members
as a result of in inheritance/succession / partition of the family business) or concerns in
which interests has been acquired as a result of relationships and in the management of
which no active part is taken.
5. Interest in agricultural and allied activities carried on with the help, if required, of hired
labour.
6. Interest in an educational institution.
7. Part-time or full-time lectureship for courses other than those relating to the Institute’s
examinations conducted under the auspices of the Institute or the Regional councils or
their branches.
8. Part-time or full-time tutorship under any educational institution other than the coaching
organization of the Institute.
9. Editorship of journals other than professional journals.
10. Any other business or occupation for which the Executive Committee considers that
permission may be granted.
However, it is open to the Council to refuse permission in individual cases though covered
under any of the above categories. For the purpose of the above resolution:
(i) the expression “relativeâ€, in relation to a member, means the husband, wife, brother or
sister or any lineal ascendant or descendant of that member;
(ii) a member shall be deemed to have a “substantial interest’ in a concern:
(a) In a case where the concern is a company, if its shares (not being shares entitled to
a fixed rate of dividend whether with or without a further right to participate in profit)
carrying not less than twenty percent of voting power at any time, during the
relevant years are owned beneficially by such member or by any one or more of the
following persons or partly by such member and partly by one or more of the
following persons:
(i) one or more relatives of the member:
(ii) one or more partners and/or their relative,
(iii) any concern in which any of the persons referred to above has a substantial
interest;
(b) In the case of any other concern, if such member is entitled or the other persons
referred to above or such member and one or more of the other persons referred to
above or persons of such number and / or are more sections of such persons are
entitled in the aggregate, at any time during the relevant years not less than twenty
per cent of the profits of such concern.
3. Office of managing director or a whole-time director o a body corporate within the
meaning of the Companies Act, 1956.
4. Interest in family business concerns (including such interest devolving on the members
as a result of in inheritance/succession / partition of the family business) or concerns in
which interests has been acquired as a result of relationships and in the management of
which no active part is taken.
5. Interest in agricultural and allied activities carried on with the help, if required, of hired
labour.
6. Interest in an educational institution.
7. Part-time or full-time lectureship for courses other than those relating to the Institute’s
examinations conducted under the auspices of the Institute or the Regional councils or
their branches.
8. Part-time or full-time tutorship under any educational institution other than the coaching
organization of the Institute.
9. Editorship of journals other than professional journals.
10. Any other business or occupation for which the Executive Committee considers that
permission may be granted.
However, it is open to the Council to refuse permission in individual cases though covered
under any of the above categories. For the purpose of the above resolution:
(i) the expression “relativeâ€, in relation to a member, means the husband, wife, brother or
sister or any lineal ascendant or descendant of that member;
(ii) a member shall be deemed to have a “substantial interest’ in a concern:
(a) In a case where the concern is a company, if its shares (not being shares entitled to
a fixed rate of dividend whether with or without a further right to participate in profit)
carrying not less than twenty percent of voting power at any time, during the
relevant years are owned beneficially by such member or by any one or more of the
following persons or partly by such member and partly by one or more of the
following persons:
(i) one or more relatives of the member:
(ii) one or more partners and/or their relative,
(iii) any concern in which any of the persons referred to above has a substantial
interest;
(b) In the case of any other concern, if such member is entitled or the other persons
referred to above or such member and one or more of the other persons referred to
above or persons of such number and / or are more sections of such persons are
entitled in the aggregate, at any time during the relevant years not less than twenty
per cent of the profits of such concern.
Explanation -
(a) The relevant years in the context of Clause (4) of part I of the First Schedule to the
Chartered Accountant Act, 1949 read with Appendix 17 mean the year/period which the
report/certificate relates and the year/period during which the said report/certificate is
signed.
(b) The relevant years in the context of Clause (11) of part I of the First Schedule to the
Chartered Accountants Act, 1949 read with Appendix 10 mean the year/period in which
not less than 20% of voting power/20% share of profits were owned beneficially.
Attention of the members is also invited to para 3 of the above Resolution relating to the
holding of office of a managing director or a whole-time director in a company. In such cases,
a member can accept the office of a managing director or a whole- time director only after
obtaining, the specific and prior approval of the Council. Attention of the members is also
invited to the provisions of Section 2 (26) of the Companies Act, 1956 under which even where
a person is not designated as a managing director or a whole-time director, he can be deemed
to be a managing director or a whole-time director if he is entrusted with the whole or
substantially the whole of the management of the affairs of the company.
It may be pointed out that a member cannot accept and hold the office of a managing director
or a whole-time director in a company if the member and/or his partners and relatives hold
substantial interest in such a company,
The Council has considered the question of permitting members in practice to become a
Director, Managing Director, full time/Executive Director etc. and related issues and the
following decisions have been taken:
As regards the question of permitting member in practice to be a Director, Promoter/Promoter-
Director, Subscriber to the Memorandum and Articles of Association of any company including
a board managed company, it was decided that -
(a) Director of a Company
(i) The expression “Director Simplicitor†means an ordinary / simple Director.
(ii) A member in practice is permitted generally to be a Director Simplicitor in any company
including a board-managed company and as such he is not required to obtain any
specific permission of the council in this behalf irrespective of whether he and / or his
relatives hold substantial interest in that company.
(b) Promoter / Promoter Director - There is no bar for a member to be a promoter /
signatory to the Memorandum and Articles of Association of any company. There ‘s also no
bar for such a promoter / signatory to be a Director Simplicitor of that company irrespective of
whether the object of the company include areas which fall within the scope of the profession
of chartered accounts. Therefore members are not required to obtain specific permission of
the Council in such cases. It must be clarified that under Section 25 of the Chartered
Accountants Act, no company can practise as a chartered accountant.
Item Nos. 4 & 5 of the Specific Resolution would be equally applicable to member carrying out
the activities referred to therein in his capacity as Karta / representative of HUF provided he is
not actively engaged in carrying on such activities.
11 January 2010
As regards the question of permitting member in practice to be a Director, Promoter/Promoter-
Director, Subscriber to the Memorandum and Articles of Association of any company including
a board managed company, it was decided that -
(a) Director of a Company
(i) The expression “Director Simplicitor†means an ordinary / simple Director.
(ii) A member in practice is permitted generally to be a Director Simplicitor in any company
Director, Subscriber to the Memorandum and Articles of Association of any company including
a board managed company, it was decided that -
(a) Director of a Company
(i) The expression “Director Simplicitor†means an ordinary / simple Director.
(ii) A member in practice is permitted generally to be a Director Simplicitor in any company
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