HUh....
Tough Conjusted & HOT Environment
let me try to make it simpler from the very beginning......
1. A company (Pvt/Pub) can carry Professional work
e.g. Tata Consultancy Services Ltd (TCS) providing software consultancy services to its clients, & other similar consultancy companies can be referred.
Even my principal has recently formed a pvt ltd company to provide Tax consultancy to its clients
2. A company provide these professional services through its Employess & Officers as per the terms of agreement between them.
3. The work performed should be Inta-vires & NOT THe ULTRA-VIRES to both the comapny & the employee or the officer of the company.
4. For works Intra-Vires to the employee the company will be held responsible and suit may be filed by third person against the company.
5. For works Ultra-Vires to the Employee/Officer of the company but Intra-Vires the Company :
(i). Third Party can claim suit against the company.
(ii). The company can recover damages from the employee(s)/officer(s) concerned & responsble for the work performed.
6. For works Ultra-Vires the company Both the company & every Officer(in personal capacity) of the comapny who is in default, shall be punishable :
(i). Third party or simply the client can file the suit against both the comapny and the officer in default (ii). The company can recover damages from the emlpoyee/officer in default if the work is Ultra-Vires that employee/officer.
In the cases of default, Comapny & the officers shall be liable as decided by the Law or the Court though Officers in default will be liable in Personal Capacities(subject to the points mentioned above)
7. A Company if limited by shares or by guarantee or by both can not carry out Comapny Audits as well as Tax Audits.
8. Though a practicing Chartered Accountant holding COP & having employment in that company can carry out Company Audits & tax Audits "in his own" prfoessional Capacity (as decided by the Cuncil of ICAI in this regard) PROVIDED he fulfills all other requirements to conduct such a Audit as per the related Law & terms of Professional Ethics.
However, for such Audits carried out by such Chartered Accountant(s) shall be liable as per The comapnies Act,1956 or as decided by any other Law or by the ICAI.
E.g. 1. PWC : Provides tax & Finance Consultancy to its clients. Employee-CAs of PWC holding COP carries the work of Audit under the name as agreed among them BUT they can't use the name & liabilities of The Comapny in whic they are in employment. Satyam's Case: Auditors were found guilty of their Professional duty & were held responsible,
However the company is still working on the same lines as before the declaration of their misconduct.
Additionally, Such Comapnies provide another relaxation to Such employee-CAs that they can form a partnership with Other CAs(may or may not be Employee of that company), though this clause varies from company to comany and as per thier therms of employment.
9. Such a CA shall be held responsible for Audit works conducted by him in his own professional capacity and aslo for the works Ultra-Vires to him against the Company.
Additionally, this is not a issue that the company is a separate leagal entity and separate from its employees & officers
Though it adds Benefit that
the INSIDER itself can WORK As OUTSIDER AT THE SAME POINT OF TIME
A copany though being separate from its Employees and Officers, bound to the works performed by them provided such works are Intra-Vires the company AND NOT Leading to the "Lifting of Corporate Viel, which is a statutory matter and varies from case to case & entirely depends on circumstances.
Again in the case of Satyam,
The work performed by the Auditors of PwC were in theior own profesional capacity hence the comapmy was not bound to thier work as restircted by its Artciles and other Statutory requireements HENCE The Corporate Viel was not lifted
Another reason for non-lifting of Corpoarate Viel was Such Auditors were niether holding the management nor the Stakes in that Company.
The Reason for non-lifting of Corporate Viel in case of Satyam itself being the findings that the Comapny & its other Shareholders & officers excluding tjose found Guilty in fraud were not aware of that fraud and such Fraud was Concealed by the deafulters from others in an intelligent manner such that it would not amount to taking benefits 7 defrauding or cheating public because of" Separate Legal entity".
"the queries/suggestions/comments & replies are welcomed....."
Any mistake committed unknowingly is expected to be corrected.. by other members....:)
regards,