In today’s dynamic and multidisciplinary professional environment, it’s no surprise that even highly specialized professionals like Chartered Accountants (CAs) often find themselves presented with opportunities outside their core practice. Whether it’s teaching, publishing, or even family businesses, CAs have been increasingly inclined to explore broader roles. However, when it comes to CAs holding a Certificate of Practice (COP), the Institute of Chartered Accountants of India (ICAI) has drawn clear boundaries.
This article unpacks the ICAI’s nuanced framework for engagement in other business or occupation by practicing CAs. It clarifies what’s allowed, what’s not, and the procedural responsibilities members must uphold to remain compliant.
The Fundamental Rule: Seek ICAI’s Permission First
A practicing CA—i.e., one holding a valid COP—is governed by Regulation 190A of the Chartered Accountants Regulations, 1988, which stipulates that no engagement in any business or occupation, apart from the profession of accountancy, can occur without prior permission from ICAI.
Key Takeaways:
- You must apply to ICAI using the prescribed form before taking up any other business or occupation.
- If you have joined or ceased any such engagement, you are expected to notify ICAI within 30 days, clearly stating the date of change.
- In case you are employed with another CA firm, a confirmation letter from the firm must also be submitted to ICAI.
This isn’t just a bureaucratic formality—it’s a professional obligation designed to preserve the ethical standards and independence expected of a practicing Chartered Accountant.
Involvement in Family Business: Not a Free Pass
Many CAs have a family legacy in traditional businesses and wish to maintain ties to them. The ICAI permits such involvement, but under very specific conditions.
A member can have an interest in a family-run business if:
- It is inherited or acquired due to succession, inheritance, or family partition;
- The member plays no active role in the management or day-to-day operations;
- The business was not started or created by the member;
- A formal application and declaration must be filed with ICAI, supported by evidence.
Accepted forms of interest include:
- As a proprietor of a family-owned firm;
- As a partner in a family partnership;
- As a Karta or member of an HUF (Hindu Undivided Family).
The guiding principle remains simple—your professional independence must remain uncompromised.
Wearing the Director’s Hat: with Strings Attached
If you are a practicing CA considering taking on the role of a Director in a company, ICAI allows this—but only in a restricted capacity known as Director Simplicitor.
Here’s what’s permissible:
- You may act as a non-executive, non-remunerated Director (excluding sitting fees);
- You may attend Board meetings but cannot involve yourself in executive or day-to-day functions;
- Your position must not impair your objectivity or create a conflict of interest.
You may also be a Promoter/Subscriber to the company’s Memorandum and Articles of Association, even if you or your relatives have a substantial interest, without requiring special permission. However, if you wish to render professional services to such a company while serving as Director, special permission from ICAI is mandatory.
Engagements with General Permission
To accommodate professional development, academic involvement, and social service, the ICAI has compiled a list of activities for which general permission is granted to members holding COP:
: 1. Employment under Chartered Accountants in practice or firms of such Chartered Accountants.
2. Private tutorship.
3. Authorship of Books and Articles.
4. Holding of Life Insurance agency license for the limited purpose of getting renewal commission.
5. Attending classes and appearing for any examination.
6. Holding of public elected offices such as M.P, M.LA & MLC.
7. Honorary office-bearership of charitable, educational or other non¬commercial organisations.
8. Acting as Notary Public, Justice of the Peace, Special Executive Magistrate and the like. 9. Part-time tutorship under the Coaching Organisation of the Institute.
9. Valuation of papers, acting as paper setter, head-examiner or moderator for any examination.
11. Editorship of professional journals.
12. Acting as Surveyor and Loss Assessor under the Insurance Act, 1938.
13. Acting as Recovery Consultant in the Banking Sector.
These do not require any special application—just ethical adherence.
What Needs Specific Permission?
Certain engagements demand more scrutiny. Before taking up these activities, a member must seek prior approval from the ICAI Council:
Full-time/Part-time employment in any business entity—only allowed if you/your relatives don’t hold substantial interest;
1. Employment in non-business organizations;
2. Taking up the role of Managing Director or Whole-Time Director in any company—again, no substantial interest allowed;
3. Holding an interest in family business without active participation;
4. Agricultural or allied activities, provided no personal management is involved;
5. Running or investing in an educational institution;
6. Engaging as a part-time/full-time lecturer or tutor (except within ICAI);
7. Editing non-professional journals;
8. Other business or occupations as may be approved by the Executive Committee on a case-by-case basis.
Even if the engagement seems harmless, proceeding without approval may lead to disciplinary action.
Substantial Interest: What Does It Really Mean?
Understanding “substantial interest” is central to determining eligibility. According to ICAI:
- In a corporate entity, if you or your relative(s) hold 20% or more of voting rights, that’s substantial.
- In a non-corporate entity, if you or your relative(s) are entitled to 20% or more of the profit, the same rule applies.
Relatives include:
- Spouse
- Siblings
- Lineal ascendants and descendants
So, even indirect control or significant profit-sharing disqualifies the “passive” defense.
Missing the Deadline? Here’s the Condonation Route
If a member fails to file the mandatory form within the 30-day window, all is not lost. ICAI provides a route for condonation of delay.
To avail this, the member must:
- Submit the delayed form along with a written request justifying the delay;
- Pay the applicable condonation fee.
While this does offer flexibility, it’s always better to comply timely to maintain a clean professional record.
Final Word: Ethics Over Opportunity
The accounting profession is built on trust, independence, and public confidence. ICAI’s restrictions and permissions are not meant to curb ambition but to preserve the sanctity of the profession. Practicing Chartered Accountants must remain vigilant, transparent, and disciplined in every engagement, whether primary or ancillary.
Before saying yes to that next board seat, guest lecture, or family business role, remember: a quick declaration or permission request can save your reputation and preserve your compliance. When in doubt, always seek clarity from ICAI.
Compliance is not just a rule; it’s a reflection of your professional integrity.
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