The Institute of Chartered Accountants of India (ICAI) has introduced the updated “ICAI (Merger and Demerger of CA Firms) Guidelines, 2024,” aimed at simplifying and enhancing the process for merging and demerging Chartered Accountant (CA) firms. These guidelines, approved at the 432nd Council meeting held in July 2024, supersede the earlier Merger and Demerger Rules issued in 2005. The revisions aim to address past challenges by providing a clear framework that encourages firms to undertake strategic mergers, enhancing operational efficiency and market presence.
The updated guidelines allow benefits to firms that merged prior to the effective date but have not completed five years post-merger. This ensures broader applicability and continuity for past actions under previous rules. The guidelines emphasize streamlined procedures and aim to foster ease of practice for CA firms. Detailed provisions are available on the ICAI website, and members can reach out to the Member & Student Section for further clarifications. These guidelines reflect ICAI’s commitment to facilitating growth and modernization within the profession.
Committee for Aggregation of CA Firms
The Institute of Chartered Accountants of India
11th February, 2025
ANNOUNCEMENT
ICAI (MERGER AND DEMERGER OF CA FIRMS) GUIDELINES, 2024
[Issued under Section 15(2) (fa) of the ‘Chartered Accountants Act, 1949
as amended by the Chartered Accountants, the Cost and Work Accountants and
the Company Secretaries (Amendment) Act 2022]
The Merger and Demerger Rules were issued in the year 2005 and various decisions were taken subsequently with respect to the seniority and mergers of the firms.
The Committee for Aggregation of CA Firms (CACAF) of ICAI has been constituted during the year 2024-25 and has undertaken a rigorous and methodical review of the Merger and Demerger Rules. The revisions represent a concerted effort to streamline the guidelines both at policy and procedural levels to mitigate the practical impediments that previously hampered CA firms to actively participate in mergers, thereby fostering ease of doing practice within the profession. The revised guidelines aim to encourage firms to explore strategic mergers which can significantly enhance their market presence, operational efficiency, among others.
Further, in exercise of the powers conferred by the Section 15(2) (fa) of the Chartered Accountants Act 1949 , [as amended by the Chartered Accountants, the Cost and Work Accountants and the Company Secretaries (Amendment) Act 2022 (No. 12 of 22)], the Council of ICAI at its 432nd meeting held during 2nd & 3rd July 2024 has approved “ICAI (Merger and Demerger of CA Firms) Guidelines, 2024”. These revised Guidelines are effective from the date of its notification.
It may be noted that the existing rules of Merger and Demerger issued by Council stands repealed. Notwithstanding such repeal, anything done, or any action taken or purported to have been done or taken under those rules shall be deemed to have been done or taken under the corresponding provisions of these Guidelines. Further, the benefit provided under these guidelines, may also be availed by those firms who got merged before the commencement of these guidelines & have not completed 5 years post-merger.
Detailed Guidelines are hosted on ICAI portal and are accessible at https://taxguru.in/chartered-accountant/icai-aggregation-llps-guidelines-2024-key-provisions.html
For any clarification/query, members may reach to the Member &Student Section through e-mail sspfirmsro[at]icai[dot]in or Ms Anindita Kundu, Firms Section at 033-30840257/65/66/67/99. Members may take a note of above.
Secretary, ICAI
