The CA Institute has decided to set up a “separate cell” within its disciplinary mechanism to fast track the disposal of cases pertaining to Chinese companies, its President Debashis Mitra has said.

The Institute of Chartered Accountants of India (ICAI), which had recently issued disciplinary notices to more than 200 chartered accountants for their alleged role in aiding several Chinese firms violate the Companies Act 2013, aims to complete the entire disciplinary proceedings by end-December, Mitra said.

“ The government has not given us any formal timeline. But the signals we get is that we have to do it this year itself. National interest is supreme and that is why we are now fast tracking it”, Mitra said when asked if the government had advised ICAI on the disciplinary matter.

CAs file response

He said almost all the 200 Chartered accountants— most of whom are being proceeded against for alleged misconduct in company incorporation by Chinese nationals/entities and creation of shell companies—have replied to the notices. 

The Director (Discipline) has taken opinion in a number of cases and the matter has travelled to the next stage —Disciplinary Committee, Mitra said.

Asserting that ICAI now has “zero tolerance to professional misconduct”.

Mitra said that the cases referred to it by the government (MCA) had started coming from January in phases and not all of them had come at one go. “Usually our disciplinary mechanism takes over a year to complete the process, but in this matter we are going to complete all of it by December this year”, he added.

The ICAI action on over 200 CAs has been initiated based on a list of 400 professionals (CAs, Company Secretaries and others) sent by the government to the ICAI and Company Secretaries Institute.

While in some cases, the Registrar of Companies (RoCs) had complained, in some other, the matter has been considered as information cases. The ICAI had, in June this year, said hundreds of CAs across the country were under its disciplinary lens.

“Of the 400 list, over 200 are chartered accountants and members of our institute”, Mitra added.

Centre tightening norms

The Centre, in recent years, has been tightening its foreign direct investment (FDI) regime on investments coming from countries that share a land border with India. The apparent effort was to curb Chinese investments in Indian companies. While the Foreign Direct Policy was tweaked in April 2020, making it mandatory to seek the Centre’s nod for investments coming from such neighbouring countries, the Corporate Affairs Ministry (MCA) had, in June this year, stipulated that citizens of those countries should obtain Home Ministry’s clearance if they were to be appointed directors of Indian companies.

The MCA had also recently made rule changes, requiring the furnishing of the Foreign Exchange Management Act compliance declaration at the time of incorporation of companies involving investments from land-border-sharing countries.