Page 412 - CA Final PARAM Digital Book.

First Schedule, Part I,Cl,11 Accepting Position on Managing Old Course – (M07E, M09R, N13R, PM17)
QNO Director
712.000
TITANIUM CNO – PE.1280
A chartered accountant in practice takes up the appointment as managing director of a public limited

company.
Answer Part I -- Relevant Laws
▪ Clause (11) of Part I of the First Schedule to the Chartered Accountants Act, 1949

▪ Regulation 190A
Part II -- Requirements of Relevant Laws
➢ Clause (11) of Part I of the First Schedule to the Chartered Accountants Act, 1949
A chartered accountant in practice is deemed to be guilty of professional misconduct, if he engages
in any business or occupation other than the profession of chartered accountants, unless permitted
by the council so to engage.

However, nothing contained in Clause (11) shall disentitle a chartered accountant from being a
director of a company, unless he or any of his partners is interested in such company as an auditor.
➢ Regulation 190A, of the Chartered Accountants Regulation, 1988
It states a member in practice cannot engage himself in any business or occupation other than that
of a chartered accountant except when permitted by the council. As per Appendix 10 of Chartered
Accountants Regulations, 1988, a Chartered Accountant in practice may hold the office of a
Managing Director a Whole-time Director of a body corporate, provided that the member and/or
his relatives do not hold substantial interest in such concern, after obtaining the specific and prior
approval of the Council.

Part III – Case Discussion
➢ In the given case, a chartered accountant in practice takes up the appointment as managing director
of a public limited company.
Part IV – Conclusion
➢ He should seek prior approval of the council otherwise he would be held guilty of misconduct.

QNO Accepting Position of MD (Management Consultancy Co.) Old Course – (M21E)
712.500 TITANIUM CNO – PE.1280
CA R, a Chartered Accountant in practice is specializing in the field of Information Systems Audit. He is
considered to be one of the experts of this field because of his command over the subject. HKC Limited, a
Company engaged in rendering management consultancy offered him to appoint as its managing
director. CA R accepted the position of managing director without obtaining prior permission from

the Institute. One of his friends , CA S informed him that now he cannot retain full time certificate of
practice, thus cannot do attest function and train articled assistants. Comment with reference to the
provisions of the
Chartered Accountants Act, 1949 and schedules thereto.
Answer Part I -- Relevant Laws
▪ Clause (11) of Part I of First Schedule to the Chartered Accountants Act, 1949

▪ Section 2(2)(iv) of the Chartered Accountants Act, 1949
Part II -- Requirements of Relevant Laws
➢ Clause (11) of Part I of the First Schedule to the Chartered Accountants Act, 1949
A Chartered Accountant in practice will be deemed to be guilty of professional misconduct if he
engages in any business or occupation other than the profession of Chartered Accountant unless
permitted by the Council so to engage.

The Council 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, 2013
provided that the body corporate 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 name of the Management Consultancy Company is required to be
approved by the Institute and such Company has to be registered with the Institute.

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