INDIA BUSINESS WORLD - DECEMBER 2005
THE MONTH THAT WAS

Foreign accounting professionals and company secretaries can look forward to doing business in India through partnerships with local professionals and firms.
The three bills to regulate cost accountants, chartered accountants and company secretaries, which the Rajya Sabha passed yesterday, allow foreign professionals to form partnerships with local partners only if the self regulators of the profession in both the countries ink a mutual recognition agreement. This would also allow domestic professionals to partner with foreign firms overseas.
Sources said the mutual recognition agreements will largely depend on the negotiations and agreements between the respective governments. The Institute of Chartered Accountants of India (ICAI) is vigorously pursuing such an agreement with Singapore, which recently inked a comprehensive economic agreement with India.

This provision is limited to only forming partnerships and does not extend to practising independently, which is a subject of trade talks under the World Trade Organisation. This development could pave the way for foreign professionals and firms to enter India in a big way through the joint venture route.

However it remains to be seen how many mutual recognition agreements are signed between Indian self-regulating bodies and their overseas counterparts. The ICAI is the self regulator for chartered accountants and the Institute of Company Secretaries of India (ICSI) is the self-regulator for company secretaries.

Currently, the ICAI has a limited mutual recognition agreement with its counterpart in England and Wales. It has given a limited recognition of CAs from India but India is yet to reciprocate. “We are talking to the profession's regulator in the US and Australia too for a reciprocal deal. There would be enough safeguards such as tests on the fiscal and corporate laws of the host country”, said ICAI president Kamlesh Vikamsey.

The bills also allow accounting professionals, company secretaries and lawyers to form multi-disciplinary partnerships. Accountants and company secretaries would also be allowed to advertise about their services in a limited way.
The bills also propose a new disciplinary mechanism for the professionals. There would be two different bodies to deal with minor and major professional misconduct. There would also be an appellate authority. The proposed system is expected to address concerns about bias in self discipline as well as judicial delays.

The bills also propose temporary removal of a guilty professional from the institute's registry for three months and a fine of up to Rs one lakh in the case of minor offences and permanent removal of name from the registry and fine of up to Rs five lakh in case of major offences.