ICAI proposes new domestic networking model for chartered accountancy firms

Public comments on a proposal to 'tap synergies' will be accepted till June 6

A committee of the Institute of Chartered Accountants of India (ICAI) has proposed a new networking model that will allow companies to "tap the synergies of the combined strength and resources".

Firms, where more than 50 per cent of partners are CAs and are registered with the ICAI, may come together to form a Limited Liability Partnership (LLP). They may also join an existing LLP, where more than 50 per cent of partners are CAs and are registered with the institute, as partner firms, the Committee for Aggregation of CA Firms has proposed. ICAI will take public comments on the proposal till June 6.

The new or existing LLP firm inducting partners would be registered with the ICAI, according to the proposal document seen by ‘Business Standard’.

The proposal said that the firms associated as partners of the LLP would be bound by a written deed allowing them to practise as independent firms simultaneously.

According to the LLP Act 2008, a company constituted within or outside India is eligible to become a partner in an LLP firm. However, under the proposed model, a firm incorporated under the Companies Act 2013 in India or under applicable laws outside has been refrained from becoming so.

"In all professional stationery like visiting cards, profiles, etc., the partner firms must mention that they are partner firms of so & so LLP firm Network. The LLP firm network must also mention in its professional stationery that so & so LLP firms are part of its partner firms," the proposal said.

ICAI has also proposed a grievance redressal cell under Members & Students Services Directorate to cater to queries on emerging issues of the LLP firm Network and to "resolve the issues".

It also said that with the registration of the new firm under the proposed model, during empanelling, government agencies like the Reserve Bank of India and NABARD would be able to attribute points based on the combined strength and geographical presence of these firms.

Currently, as per the Guidelines for Networking of Indian CA Firms 2021, there are three models of domestic networking in India.

First, different firms can come together and ally with a new name but continue to practice independently.  

Second, different CA firms can come together to form a network with a new name and practice in the name of firms belonging to the network. This model is subdivided into two options. One, the network may contain different firms where all practise under their names. Second, there may be a lead firm acting on behalf of the constituent firms.