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ICAI Rules of Merger & Demerger of CA Firms 15

Annexure 15
ICAI Rules of Merger & Demerger of CA Firms

A N N O U N C E M E N T
RULES OF NETWORK AND MERGER - DEMERGER AMONGST THE FIRMS REGISTERED WITH
THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA

The Council at its 245th Meeting held from 31st August, 2004 [Explanation —
to 2nd September, 2004 at New Delhi considered the Report of
the Study Group on Capacity Building Measures of CA Firms 1. An affiliation as referred to above shall also
and accepted the same with certain modification. The report as include: -
accepted has been hosted in the web site of the Institute under (i) having an association with an
the title, `Capacity Building Measures 2004’. accounting entity within or outside India
The Council at its 247th Meeting held from 4th January to such that it results directly or indirectly
6th January, 2005 at New Delhi has decided that the Rules in a common professional economic or
of Network amongst the firms registered with ICAI, Rules of beneficial interest.
Merger & Demerger formulated and finalized on the basis of (ii) one or more of the entities holding out
recommendations of the Study Group shall come into force that it is so affiliated or networked.
w.e.f. 6th January, 2005.
2. An entity shall not be treated as an affiliate
In the matter relating to network of firms registered with ICAI of another merely for the reason that they
and entities outside India, the Council decided that in addition
to the compliance with the Rules of Network amongst the firms (a) share professional knowledge and data
registered with ICAI, the entities outside India wiling to form base;
network with Indian CA firms would give a declaration in Form (b) refer certain professional assignments

`D’ (enclosed). or authorize the other to represent
certain specific matters.
RULES OF NETWORK 3. If different Indian firms are networked with
1. These Rules are called Rules for Network amongst a common Multi National Accounting Firm
the firms Registered with The Institute of Chartered (MAF) then irrespective of the presence/
Accountants of India. absence of any
`affiliate’ relationship between the Indian firms
2. Definition. inter-se, they shall be considered as part of

(i) Network - a network.]
“Network amongst two or more firms means an (ii) Formal Network - Formal network means a
arrangement to facilitate the better functioning of network amongst two or more firms registered with
the affiliate member firms in the interest of the The Institute of Chartered Accountants of India
profession and not for acquisition of any gain. (ICAI), where the object of network is to use the
Such Network shall include the formal Network collective resources of the affiliates for execution
to use the collective resources such as turnover, of professional services of one or more types at
infrastructures, manpower, location for execution one and/or at multi-locational points. The resources
of Professional services of one or more type. would include financial, technical and other logistic

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