The Chartered Accountants, the Cost and Works Accountants and the Company Secretaries (Amendment) Bill, 2021 (“Bill”) was introduced in Lok Sabha on December 17, 2021. The Bill proposes to amend the Chartered Accountants Act, 1949, the Cost and Works Accountants Act, 1959 and the Company Secretaries Act, 1980 (“Acts”).
Key highlights of the Bill (as introduced in Lok Sabha):
- The amendments are based on the recommendations of a High-Level Committee constituted by the MCA, among other things, to examine the existing provisions in the Acts and the rules and regulations made thereunder, for dealing with the cases of misconduct, to strengthening the existing mechanism and ensure speedy disposal of the disciplinary cases in the three Professional Institutes, namely:
- The Institute of Chartered Accountants of India
- The Institute of Cost Accountants of India
- The Institute of Company Secretaries of India
- The bill proposes to empower Council of Institutes to decide fee on registration of members for entry of names in the Register of members or as a Fellow member and to dispense with the condition of prior approval of Central Government to determine such fees.
- The Bill states that firms must register with the Institutes by making an application to the respective Councils of the Institutes. The Councils must maintain a register of firms containing details such as pendency of any actionable complaint or imposition of penalty against the firms.
- The Bill constitutes Disciplinary Directorate for time-bound investigations i.e. the respective Councils of the three Institutes under the Acts would be required to constitute a Disciplinary Directorate, headed by Director (Discipline), who is an officer of the Institute. The Bill further provides that each Directorate must also include at least two Joint Directors.
- Under the three Acts, the bill proposes each Council shall constitute a Board of Discipline. Members of the Board include:
- Presiding officer (having experience in law and knowledge of disciplinary matters).
- Two members
- Director (Discipline) as secretary.
- Under the three Acts, the Councils shall constitute Disciplinary Committees (DC) consisting of:
- Presiding Officer (President or Vice-President of the Council).
- Two members elected from the Council.
- Two members nominated by the Central Government.
The Bill amends the Acts to provide that the Presiding Officer must not be a member of the institutes and shall be nominated by the central government. The Committee must conclude its inquiry in 180 days from the receipt of the preliminary examination report.
- Under the Acts, in cases of professional or other misconduct by the members, the Committees may:
- reprimand or remove the member from the Register of the Institute, or
- impose a fine of up to Rs. 5 lakhs.
- The Bill increases the maximum amount of fine to Rs. 10 lakhs. The Bill also provides that the Committee may take certain actions against the firm which is found habitual offender, i.e. (if a partner or owner of a firm is repeatedly found guilty of misconduct during the last five years). The actions include:
- prohibiting the firm from undertaking activities related to the profession of chartered account, cost accountant, or company secretary, as the case may be, for up to two years, or
- imposing of a fine of up to Rs 50 lakhs.