Page 393 - CA Final Audit Titanium Full Book. (With Cover Pages)

CA Ravi Taori

Lectureship: Part-time or full-time lectureship are allowed for courses unrelated to the Institute's examinations
conducted by the Institute, Regional councils, or their branches. (Eg Foreign Language Etc)
Family Business Interest: Members can have an interest in a family business or a business acquired through
relationships, as long as they do not actively participate in its management. This includes interests gained through
inheritance, succession, or partition of the family business.
Editorship: Members can hold editorship roles for journals that are not professional journals.
Non-Business Employment: Full-time or part-time employment in non-business organizations is permitted.
Corporate Leadership: Members can hold the position of managing director or whole-time director in a
company, as long as they or their relatives do not have a Significant Interest in it.
However, it is open to the Council to refuse permission in individual cases though covered under any of the
above categories.
Clarifications For the purpose of the above resolution:
Relatives: The term "relative" is defined as the husband, wife, brother, sister, or any lineal ascendant or
descendant of a member.
Substantial Interest: A member is considered to have a "substantial interest" in a concern if they own not less
than twenty percent of voting percentage or profits, either alone or in combination with relatives or other
concerns in which relatives have substantial interest. (Voting Percentage for Companies & Profits for Other
Entities)
MD / WTD: A member can only accept the role of a managing director or a whole-time director after obtaining
specific and prior approval from the Council.
Deemed MD / WTD: Section 2(26) of the Companies Act, 1956 (now Section 2(54) of the Companies Act, 2013)
states that a person can be deemed a managing director or a whole-time director if they are entrusted with the
management of the company. A member cannot hold such a position if they, their partners, or relatives hold
substantial interest in the company.

Director Related Matters
Director Simplicitor: A member in practice is allowed to be a "Director Simplicitor" (a non-managing, non-
full-time director who only attends board meetings and is not paid any remuneration except for attending such
meetings) in any company, including a board-managed company. No specific permission from the Council is
required unless the member or any of his partners is interested in the company as an auditor, regardless of
whether he and/or his relatives hold a substantial interest in the company.
Auditor of Subsidiary Cannot Become Director of Holding: The Ethical Standard Board (ESB) has clarified
that an auditor of a Subsidiary Company cannot be a Director of its Holding Company. This is because a
Chartered Accountant in practice cannot engage in any business or occupation other than the profession of
Chartered Accountant, except when permitted by the Council. This rule applies when the Chartered Accountant
or any of his partners is not interested in the company as an auditor.
Independence: The ESB emphasizes that public conscience should be ahead of the law. Members are expected
to interpret independence requirements more strictly than what the law requires and should avoid positions that
could compromise or jeopardize their independence.
Promoter/Promoter Director -
Promoter/Signatory Freedom: No restrictions for members to be promoters or signatories of a company's
Memorandum and Articles of Association.
Directorship: No restrictions for such promoters or signatories to be Directors of the company.
Scope of Profession: This applies regardless of whether the company's objectives fall within the scope of the
profession of Chartered Accountants.
Council Permission: Members do not need permission from the Council in these cases.
Company Practice Limitation: Companies cannot practice as Chartered Accountants under Section 25 of the
Chartered Accountants Act.

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