Facts of the Case

The complaint was filed by Shri Ramesh Gholap, Deputy Registrar of Companies, Ministry of Corporate Affairs, pursuant to an inspection ordered under Sections 206–207 of the Companies Act, 2013 in respect of Swargamrut Agro Estate Private Limited. During inspection of books and records, it was observed that CA Girish Ravindra Amonker was shown as a director of the company for the period from 01 September 2008 to 22 March 2014 while simultaneously holding a full-time Certificate of Practice as a Chartered Accountant.

The inspection report alleged that the Respondent acted as an Executive Director during the said period without obtaining prior permission from the Council of ICAI, thereby violating Regulation 190A of the Chartered Accountants Regulations, 1988. The Respondent was asked to produce evidence of ICAI permission, which he did not produce at that stage, leading to initiation of disciplinary proceedings.

Issues Involved

Whether the Respondent, while holding full-time Certificate of Practice, acted as an Executive Director of a company without obtaining prior permission of the ICAI Council, and whether such conduct constituted professional misconduct under Item (11) of Part I of the First Schedule to the Chartered Accountants Act, 1949.

Complainant’s Allegations

The complainant alleged that the Respondent functioned as an Executive Director of the company while being a practicing Chartered Accountant, signed financial statements and Directors’ Reports, and was shown as part of Key Managerial Personnel in Notes to Accounts for certain years, thereby engaging in business or occupation without ICAI approval.

Respondent’s Submissions

The Respondent submitted that he was appointed only as an Independent / Professional Director (Director Simplicitor) and never as an Executive Director. He relied on Form 32, Annual Returns, Form 20B, and ROC records, which consistently showed his designation as Non-Executive Additional Director / Professional Director.

He explained that an incorrect draft Form 32 showing him as Executive Director was mistakenly submitted by company staff to the Disciplinary Directorate and not filed with the ROC. The Respondent clarified that the correct Form 32 filed with the ROC on 04 September 2008 clearly reflected his status as Non-Executive Professional Director.

The Respondent further submitted that he never drew any remuneration or sitting fees, was not a shareholder, did not participate in day-to-day management, did not sign cheques or contracts, and attended board meetings only. He also filed an affidavit affirming that inclusion of his name as Key Managerial Personnel in Notes to Accounts was a reporting mistake by the company.

Court / Authority Order and Findings

The Board of Discipline examined the inspection report, ROC filings, Form 32, Annual Returns, financial statements, Income Tax Returns and the affidavit filed by the Respondent. The Board observed that all statutory filings with the ROC consistently described the Respondent as Non-Executive / Additional Director and not as Executive Director.

The Board took note of Regulation 190A, which permits a Chartered Accountant in practice to act as Director Simplicitor without obtaining prior permission of the Council, provided he is not involved in day-to-day management and does not receive remuneration other than sitting fees.

The Board noted that apart from signing financial statements and Directors’ Reports — which is permissible for a Director Simplicitor — there was no evidence that the Respondent participated in management of the company’s affairs. The Board also noted that the Respondent did not receive any remuneration and that the incorrect designation arose due to a clerical error and not deliberate concealment.

On the basis of documentary evidence and consistent ROC records, the Board concluded that the Respondent acted only as Director Simplicitor and did not violate Regulation 190A.

Important Clarification

The Board clarified that a Chartered Accountant in practice is permitted to act as Director Simplicitor, including signing financial statements, without prior ICAI permission, so long as he does not engage in executive or managerial functions. Clerical or reporting errors in company records, when duly explained and supported by statutory filings, do not amount to professional misconduct.

Final Outcome

The ICAI Board of Discipline held CA Girish Ravindra Amonker (M. No. 042163) Not Guilty of Professional Misconduct under Item (11) of Part I of the First Schedule to the Chartered Accountants Act, 1949. By order dated 13 December 2022, the Board directed closure of the case under Rule 15(2) of the Chartered Accountants (Procedure of Investigations of Professional and Other Misconduct and Conduct of Cases) Rules, 2007.

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