CA Neha, a Chartered Accountant in practice, is approached by Growtech Ltd., a startup company planning to raise capital through an Initial Public…

The Council of the Institute of Chartered Accountants of India (ICAI) pursuant to Section 2 (2) (iv) of the Chartered Accountants Act, 1949 has passed a resolution permitting a Chartered Accountant in practice to render entire range of “Management Consultancy and other Services”. A clause of the aforesaid resolution allows Chartered Accountants in practice to act as advisor or consultant to an issue, including preparation of publicity budget, advice regarding arrangements for selection of (i) ad-media, (ii) centres for holding conferences of brokers, investors, etc., (iii) bankers to issue, (iv) collection centres, (v) brokers to issue, (vi) underwriters and the underwriting arrangement, distribution of publicity and issue material including application form, prospectus and brochure and deciding on the quantum of issue material. It is, however, specifically stated that Chartered Accountants in practice are not permitted to undertake the activities of broking, underwriting and portfolio management services. In the given situation, CA. Neha, a practicing Chartered Accountant, is helping the company as an advisor, she also underwrote the public issue of the company Growtech Ltd., a startup company, to the extent of 20% at a commission of 1%. In view of Section 2 (2) (iv) of the Chartered Accountants Act, 1949, contention of CA Neha that provision of Code of Conduct (Ethics) are not binding in providing such services is not correct. Accordingly, CA Neha is permitted to provide the services of advisor or consultant to an issue as part of Management Consultancy and other Services under section 2 (2) (iv) of the Chartered Accountants Act, 1949. However, CA Neha would be held guilty of professional misconduct under the Chartered Accountants Act, 1949 for underwriting the public issue of the Company.