A Chartered accountant in practice can
also practice in corporate form. The Council permits a Chartered Accountant in
practice to practice in Corporate
Form also subject to compliance of Guidelines
for Practice in Corporate Form. He can operate both the entities
simultaneously. This is to empower the members to face the emerging challenges
in the service sector as well as to equip themselves for the opportunities in
the non-audit service area.
The Council at its 261st meeting held from 1st
to 3rd August 2006 decided to allow members in practice to hold the office of
Managing Director, Whole-time Director or Manager of a body corporate within
the meaning of the Companies Act, 1956 provided that the body corporate ( (
Management Consultancy Company )is engaged exclusively in rendering “Management
Consultancy and Other Services” permitted by the Council in pursuant to Section
2(2)(iv) of the Chartered Accountants Act, 1949 and complies with the
conditions(s) as specified by the Council from time to time in this regard. The
guidelines in this regard have been issued w. e. f. 01.10.2006.
Any member, who wishes to become Managing
Director/Whole-time Director /Manager of an existing Company, shall comply with the Guidelines for Practice
in Corporate Form. Further member can retain full time Certificate of
Practice besides being the Managing Director/Whole-time Director/Manager of Management Consultancy Company. He will be entitled to train
articled/audit assistant(s). There will
be no restrictions on the quantum of the equity holding of the member, either
individually and/or along with his relatives, in such a company.
MANAGEMENT CONSULTANCY COMPANY (MCC)
A
normal company incorporated for the purpose or any existing company can be use
to have a practice in corporate form. ICAI declared such company as Management
Consultancy Company.
Any
Company complies with the Guidelines for Practice in Corporate Form issued by
the Institute shall be a Management Consultancy Company. A Chartered Accountant
in practice can also run a Management Consultancy Company. This Management
Consultancy Company shall have a distinct name which shall be approved by the
Institute.
NON AUDIT SERVICES CAN BE PROVIDED THROUGH MCC
Management
Consultancy & Other Services permitted by the Council in pursuance to
Section 2(2)(iv) of the Chartered Accountants Act, 1949. The definition of the expression “Management
Consultancy and other Services” as appearing at pages 8-10 of Code of Ethics,
2005 edition, is as under:
The expression “Management Consultancy and other Services” shall not include the
function of statutory or periodical audit, tax (both direct taxes and indirect
taxes) representation or advice concerning tax matters or acting as liquidator,
trustee, executor, administrator, arbitrator or receiver, but shall include
the following:
(i)
Financial management planning and
financial policy determination.
(ii)
Capital structure planning and
advice regarding raising finance.
(iii)
Working capital management.
(iv)
Preparing project reports and
feasibility studies.
(v)
Preparing cash budget, cash flow
statements, profitability statements, statements of sources and application of
funds etc.
(vi)
Budgeting including capital
budgets and revenue budgets.
(vii)
Inventory management, material
handling and storage.
(viii)
Market research and demand
studies.
(ix)
Price-fixation and other
management decision making.
(x)
Management accounting systems,
cost control and value analysis.
(xi)
Control methods and management
information and reporting.
(xii)
Personnel recruitment and
selection.
(xiii)
Setting up executive incentive
plans, wage incentive plans etc.
(xiv)
Management and operational audits.
(xv)
Valuation of shares and business
and advice regarding amalgamation, merger and acquisition.
(xvi)
Business Policy, corporate
planning, organisation development, growth and diversification.
(xvii)
Organisation structure and behavior,
development of human resources including design and conduct of training
programmes, work study, job-description, job evaluation and evaluation of workloads.
(xviii)
Systems analysis and design, and
computer related services including selection of hardware and development of
software in all areas of services which can otherwise be rendered by a
Chartered Accountant in practice and also to carry out any other professional
services relating to EDP.
(xix)
Acting as advisor or consultant to
an issue, including such matters as: -
(a) Drafting of prospectus and memorandum
containing salient features of prospectus. Drafting and filing of listing
agreement and completing formalities with Stock Exchanges, Registrar of
Companies and SEBI.
(b) Preparation
of publicity budget, advice regarding arrangements for selection of (i)
ad-media, (ii) centre for holding conferences of brokers, investors, etc.,
(iii) bankers to issue, (iv) collection centre, (v) brokers to issue, (vi)
underwriters and the underwriting arrangement, distribution of publicity and
issue material including application form, prospectus and brochure and deciding
on the quantum of issue material (In doing so, the relevant provisions of the
Code of Ethics must be kept in mind).
(c) Advice regarding selection of various agencies
connected with issue, namely Registrars to Issue, printers and advertising
agencies.
(d) Advice on the post issue activities, e.g.,
follow up steps which include listing of instruments and despatch of certificates
and refunds, with the various agencies connected with the work.
Explanation:
For removal of doubts, it is hereby clarified that the activities of broking,
underwriting and portfolio management are not permitted.
(xx)
Investment counseling in respect
of securities [as defined in the Securities Contracts (Regulation) Act, 1956
and other financial instruments.] (In doing so, the relevant provisions of the
Code of Ethics must be kept in mind).
(xxi)
Acting as registrar to an issue
and for transfer of shares/other securities. (In doing so, the relevant
provisions of the Code of Ethics must be kept in mind).
(xxii)
Quality Audit.
(xxiii)
Environment Audit.
(xxiv)
Energy Audit.
(xxv)
Acting as Recovery Consultant in
the Banking Sector.
(xxvi)
Insurance Financial Advisory
Services under the Insurance Regulatory & Development Authority Act, 1999,
including Insurance Brokerage.
(xxvii)
Further The Council at its 263rd
meeting held from 12th to 14th October 2006 clarified that the expression
“Management Consultancy & Other Services” already includes such services as
rendered by a Certified Filing Centre under MCA 21 e-governance programme of
the Ministry of Company Affairs, Government of India
REQUISITES FOR NAME OF THE MCC
The Management Consultancy Company shall have a
distinct name which shall be approved by the Institute. Standards prescribed in
Regulations 190 of the Chartered Accountants Regulations, 1988 shall be
applicable to the name of the Management Consultancy Company. However, even if a name is provided and
subsequently it is found that the same is undesirable then said name can be
withdrawn at any time by the Institute.
The provisions in respect of name of companies as prescribed in the
Companies Act, 1956 shall be applicable in letter and spirit. The name of
Management Consultancy Company may indicate the area of ‘Management Consultancy
& Other Services’ permitted by the Council from time to time. The
Management Consultancy Company shall neither be permitted to advertise nor to
use logo. The prescribed format of application for approval of Name for Management
Consultancy Company is at Form `G’ .
OBJECTS CLAUSE OF
MCC
The Object Clause should restrict itself only to the
Management Consultancy & Other Services permitted by the Council in
pursuance to Section 2(2)(iv) of the Chartered Accountants Act, 1949.The Management
Consultancy Company shall engage itself only in Management Consultancy
& Other Services. The Management
Consultancy Company shall give an undertaking that it shall render only
Management Consultancy & Other Services prescribed by the Council pursuant
to powers under section 2 (2)(iv) of the Chartered Accountants Act, 1949.
MCC TO COMPLY AFTER REGISTRATION
After approval of the name under Guideline 3 and
incorporation under the Companies Act, 1956, the Management Consultancy Company
is required to be registered with the Institute in a prescribed Form ‘H’. Once the Management Consultancy Company is Registered with the Institute as per
the Guidelines, it will be necessary for such a Company to comply with
the following requirements:
a)
If the individual
practitioner/sole-proprietorship firm/partnership firm is the statutory auditor
of an entity then the Management
Consultancy Company should not accept the internal audit or book-keeping
or such other professional assignments which are prohibited for the statutory
auditor firm.
b)
The Notification No. 1-CA(7)/60/2002
dated 8th March, 2002 in respect of ceiling on Non-audit fees is
applicable in relation to a Management Consultancy Company.
c) The
Management Consultancy Company shall comply with clauses (6) & (7) of
Part-I of the First Schedule to the Chartered Accountants Act, 1949 and such
other directives as may be issued by the Institute from time to time. The Management Consultancy Company shall give
an undertaking to comply with clauses (6) & (7) of Part-I of the First
Schedule to the Chartered Accountants Act, 1949 and such other directives as
may be issued by the Institute from time to time .
TRANSITORY PROVISIONS FOR EXISTING COMPANY
Any member,
who wishes to become Managing Director/Whole-time Director /Manager of an
existing Company, which is rendering Management
Consultancy & Other Services, and wishes to take other benefit contained in
the Guidelines, shall comply with the Guidelines for Practice in Corporate
Form. The Company is required to take approval of name and then apply for
registration with the Institute. If the Institute has reservation over the name
of an existing Company that wishes to come under the provisions of this
Guidelines, the Company shall be required to apply for change in name. The
Company is also required to change its object clause, if the same contains
objects other than those provided in the Guidelines.
STEP BY STEP PROCEDURES FOR
FORMATION OF MCC
Step one;
Select
specialized services for consultancy services as mentioned in Section 2(2)(iv)
of the Chartered Accountants Act, 1949
Step Two;
Get
the approval of name from respective ROC.
Step Three;
It
is require submitting form “G” with ICAI to seek name approval for the MCS
Company after approved by ROC. First Part of Name usually indicates of the
promoters name and second part indicates of specific area for proposed
consultancy services. Any abstract name or name of God/Goddess or other than
human being is not permissible. Usually
suffix as allowed by ROC is permitted with name of MCS Company
Step Four;
Preparation
of Memorandum of Association and Article of Association of the company and
executing legal documents required for the same. Define the object clause of
the Management Consultancy Company as the Management Consultancy Company shall
engage itself only in Management Consultancy Services identified by ICAI under
relevant guidelines and the other services prescribed by the Council of the
Institute. Get it registered with respective ROC.
Step Five;
File
an application with Regional Office of ICAI for registration of Management
Consultancy Company in the prescribed format i.e. forms “H”.
The
necessary changes in Companies Act 2013 have yet to replace in the guidelines
issued for the purpose. The option of to have an OPC has also not taken care of
by the regulator so far. It is also not possible to incorporate a company
through INS 29 because of requisition of name approval from ICAI.
FORMS PRESCRIBED FOR THE
NETWORK
Form `G’
APPLICATION FOR APPROVAL OF NAME FOR PROPOSED
MANAGEMENT CONSULTANCY COMPANY
THE INSTITUTE OF CHARTERED ACCOUNTANTS OF
INDIA
1. Proposed name of the Company 1.
_______________________
(in
order of preference) 2. _______________________
3. _______________________
2. Name of the Members/firm along with name of
partners forming proposed Management
Consultancy Company
Firm
Name/Member Name Firm Regn.
No./M.No.
3. Address of the Registered Office of the
proposed Management Consultancy Company
_________________________________
_________________________________
_________________________________
_________________Pin _____________
Tel. No. __________________________
Fax No. __________________________
E-mail ___________________________
Website
Address ___________________
4. Ownership pattern of the Company
5. Name of the member proposing to become
Managing Director/Whole-time Director/Manager
Name of the Member Membership No.
1. ________________________ _____________
2. ________________________ _____________
3. ________________________ _____________
Place :
……………………… Name(s)
with Membership No(s).
and
signature(s) of duly authorized
Date : ……………………… Partner(s)/Proprietor(s)
of the firms
Form ‘H’
DECLARATION FOR REGISTRATION OF MANAGEMENT CONSULTANCY COMPANY
THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA
1. Name
of the Management Consultancy Company
2. Address
of the
(i)
Registered Office
(ii) Branch Office
3. Ownership pattern of the Company
4. Name of the member(s) proposing to become
Managing Director/Whole-time Director/Manager
Name of the Member Membership No.
1. ________________________ _____________
2. ________________________ _____________
3. ________________________ _____________
5. Number
and Date of Incorporation Certificate
(Please enclose Incorporation Certificate issued by
the ROC)
I/We
hereby declare that the Management
Consultancy Company shall render Management Consultancy & Other
Services which are prescribed by the Council of the Institute from time to time
pursuant to powers under Section 2(2)(iv) of the Chartered Accountants Act,
1949. This Company has been constituted in compliance with the Guidelines for
Practice in Corporate Form issued by the Institute.
I/We hereby declare that I/We shall comply
with Clauses (6) & (7) of Part I of the First Schedule to the Chartered
Accountants Act, 1949 and such other directions as may be issued by the
Institute from time to time in this regard.
|
Place :
……………………
Date :
……………………
|
Signatures of two authorised Directors of
the body corporate and the Managing Director/Working Director of that body
corporate together with his membership no. under a common seal and with a
Board Resolution.
(Enclose a copy of Board Resolution)
|
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