liability rules are expected to lead to increased consolidation and
the creation of inter-disciplinary firms, potentially spelling an
end to the country’s multitude of micro practices.
But before these changes come into force,
three professional bodies – the Institute of Chartered Accountants
of India, Institute of Company Secretaries of India and Institute
of Cost and Works Accountants of India (ICWAI) – need to amend
their regulations to allow the new structures in their
institutes.
ICWAI president Kunal Banerjee said this
process will take several months for the ICWAI as no changes can be
made until the Indian general election has been completed.
The changes, made to address a gap in the
business structure to enable high growth in the professional
service sector, were made possible by the passing of the Limited
Liability Partnership (LLP) Law by the Indian Ministry of Corporate
Affairs earlier this year.
The amendments allow the formation of
multi-disciplinary firms providing a range of services. Previously
firms could only be formed between members of the same professional
body.
The new LLPs require a minimum of two
partners. In a break with the old legislation there is no limit on
the maximum number of partners. The current limit is 20.
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By GlobalDataBanerjee has welcomed the modernising move but
says it is too early to know how many firms will adopt the new
status.
“I think this will be a good step forward.
Today if you want the services of a cost accountant you go to a
cost accountant firm, if you want the services of a chartered
accountant you go to a chartered accountant firm. This is going to
allow you a single window solution. It may also give rise to larger
firms coming into force,” he said.
Consolidation could be significant. By some
estimates there are about 65,000 practising chartered accountants
in India and about 40,000 to 45,000 chartered accounting firms.
