The Hindu Business Line : Study outlines merger norms for CA firms

CHARTERED accountancy firms can soon look forward to adopting `mergers' as a tool for consolidation and render professional services of larger range spread over bigger geographical area.

An ICAI study group on capacity building measures for CA firms has spelt out the modalities or process through which mergers can be effected between chartered accountancy firms.

The Indian Partnership Act, 1932 has no provisions to facilitate mergers of firms. Further, Section 25 of the Chartered Accountants Act 1949 prohibits practice of the profession of chartered accountancy by corporate bodies.

The study group has now recommended that merger between CA firms has to be effectuated by entering into a new partnership deed/reconstitution deed. Such a deed would have to be filed with the registrar of firms as required under the law. Further, the study group has also stipulated that the merger agreement has to be executed and filed with the institute.

The Central Council of ICAI has accepted the recommendations of the study group.

The study group has also noted that a merged big entity would always be superior to a network arrangement. In order to have an orderly and sustainable growth of the CA firms, the study group has held that it is desirable that the coming together of the firms begins with "networking" and then matures to mergers.

As of June 2004, the ICAI had about 1,17,080 members. In India, the sole proprietary firms/small partnership firms have been the most common form of organisation of CA firms.

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