The Institute of Chartered Accountants of India (ICAI) has introduced the ICAI (Merger and Demerger of CA Firms) Guidelines, 2024, aimed at streamlining the process of firm mergers and demergers. These guidelines, approved by the ICAI Council at its 432nd meeting held on July 2-3, 2024, mark a significant regulatory overhaul to foster ease of practice and enhance operational efficiency among CA firms.
Key Highlights of the New Guidelines
- Enhanced Framework for Mergers: The revised guidelines encourage CA firms to explore strategic mergers to improve market presence, resource pooling, and service diversification.
- Repeal of 2005 Rules: The previous Merger and Demerger Rules, 2005 have been repealed. However, firms merged before these guidelines but within the last five years can still avail of the benefits under the new framework.
- Legal Backing: Issued under Section 15(2)(fa) of the Chartered Accountants Act, 1949, as amended by The Chartered Accountants, the Cost and Work Accountants, and the Company Secretaries (Amendment) Act, 2022.
- Improved Clarity and Compliance: The revised guidelines address practical challenges that previously hindered firms from actively engaging in mergers, ensuring a smoother and more transparent process.
Official copy of the notification is as follows
Committee for Aggregation of CA Firms
The Institute of Chartered Accountants of India
11th February, 2025
ANNOUNCEMENT
ICAI (MERGER AND DEMERGER OF CA FIRMS) GUIDELINES, 2024
[Issued under Section 15(2) (fa) of the 'Chartered Accountants Act, 1949
as amended by the Chartered Accountants, the Cost and Work Accountants and
the Company Secretaries (Amendment) Act 2022]
[Issued under Section 15(2) (fa) of the 'Chartered Accountants Act, 1949 as amended by the Chartered Accountants, the Cost and Work Accountants and the Company Secretaries (Amendment) Act 2022]
The Merger and Demerger Rules were issued in the year 2005 and various decisions were taken subsequently with respect to the seniority and mergers of the firms.
The Committee for Aggregation of CA Firms (CACAF) of ICAI has been constituted during the year 2024-25 and has undertaken a rigorous and methodical review of the Merger and Demerger Rules. The revisions represent a concerted effort to streamline the guidelines both at policy and procedural levels to mitigate the practical impediments that previously hampered CA firms to actively participate in mergers, thereby fostering ease of doing practice within the profession. The revised guidelines aim to encourage firms to explore strategic mergers which can significantly enhance their market presence, operational efficiency, among others.
Further, in exercise of the powers conferred by the Section 15(2) (fa) of the Chartered Accountants Act 1949 , [as amended by the Chartered Accountants, the Cost and Work Accountants and the Company Secretaries (Amendment) Act 2022 (No. 12 of 22)], the Council of ICAI at its 432nd meeting held during 2nd & 3rd July 2024 has approved "ICAI (Merger and Demerger of CA Firms) Guidelines, 2024". These revised Guidelines are effective from the date of its notification.
It may be noted that the existing rules of Merger and Demerger issued by Council stands repealed. Notwithstanding such repeal, anything done, or any action taken or purported to have been done or taken under those rules shall be deemed to have been done or taken under the corresponding provisions of these Guidelines. Further, the benefit provided under these guidelines, may also be availed by those firms who got merged before the commencement of these guidelines & have not completed 5 years post-merger.
Detailed Guidelines are hosted on ICAI portal and can also be accessed from here
For any clarification/query, members may reach to the Member &Student Section through e-mail sspfirmsro[at]icai[dot]in or Ms Anindita Kundu, Firms Section at 033-30840257/65/66/67/99. Members may take a note of above.
Secretary, ICAI
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