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PRESENTATION ON NEW DISCIPLINARY MECHANISM (10 th April, 2007)

PRESENTATION ON NEW DISCIPLINARY MECHANISM (10 th April, 2007). THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA. Disciplinary Mechanism – Certain Significant Changes Presentation at seminar organized by Rajkot Branch of WIRC of ICAI.

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PRESENTATION ON NEW DISCIPLINARY MECHANISM (10 th April, 2007)

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  1. PRESENTATION ON NEW DISCIPLINARY MECHANISM(10th April, 2007) CA UTTAM AGARWAL

  2. THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA Disciplinary Mechanism – Certain Significant Changes Presentation at seminar organized by Rajkot Branch of WIRC of ICAI CA UTTAM AGARWAL

  3. Certain Significant ChangesNew Form of Complaint and Fee • Complaint Form – Form ‘1’ to replace Form ‘8’. • Contents of Form – by and large same. • Form ‘1’ to be specified under the Rules. • Complaint Fee – New fee not yet brought into force. • Fee once paid is not refundable. CA UTTAM AGARWAL

  4. New Procedure for lodging complaints by Governments/Statutory Authorities Government Complaints Who would authorise? • Government complaints – State or Central to be authorised by an Officer holding post not below the rank of a Joint Secretary or equivalent in the respective Governments. Who would sign? • Such Government complaints can then be signed by an Officer holding a post not below the rank of Under Secretary or equivalent in respective Governments. CA UTTAM AGARWAL

  5. New Procedure for lodging complaints by Governments/Statutory Authorities (contd…) Complaints of Statutory Authorities Who would authorize and who would sign? • Complaints of Statutory Authorities like RBI, SEBI to be authorised by an officer holding a post equivalent to post of Joint Secretary in Government of India and can then be signed by an officer holding a post not below the rank of Under Secretary or equivalent in the Central or State Government. CA UTTAM AGARWAL

  6. New Procedure for lodging complaints by Governments/Statutory Authorities (contd…) What course of action in case of subsequent change in Complainant? • In the event of any subsequent change in the name of original Complainant representing Governments/Statutory authorities/Financial institutions, the same to be supported by a specific authorisation of an officer holding a post equivalent to that of the original Complainant. Government and statutory authorities forego right, if opt for not filing a complaint. CA UTTAM AGARWAL

  7. Complaints of Companies or Firms Need for resolution in favour of individual • Complaints of a company or firm to be accompanied by a resolution, passed respectively by the Board of Directors or Partners, specifically authorising an officer or person to prefer complaint on behalf of company or firm. CA UTTAM AGARWAL

  8. Rigid timeframe for processing complaints • The stage of submission of Comments on Rejoinder by Respondent discontinued. • Respondent/Complainant to submit Written Statement/Rejoinder respectively within 21 days of service of copy respectively of complaint or Written Statement or within the extended time granted which shall not exceed 30 days in any case. CA UTTAM AGARWAL

  9. Rigid timeframe for processing complaints (contd…) • In the event of non-receipt of Written Statement or Rejoinder within extended time, the Director (Discipline) to presume that the party has nothing further to state and accordingly proceed further. • Stipulated time for scrutiny, registration and forwarding to Respondent for Written Statement is sixty days (from the date of receipt of complaint). CA UTTAM AGARWAL

  10. New Norms for compliance by Firms • In case of a complaint against Firm, notice to be sent to the Firm and the Firm to send declaration duly signed by member or members (jointly) answerable to the effect that he/she or they are responsible for answering the complaint and that the complaint sent by the Director (Discipline) has been received by him/her or them. • A notice to Firm shall be notice to all members – partners as well as employees of the Firm as on the date of registration of complaint. CA UTTAM AGARWAL

  11. New Norms for compliance by Firms (contd…) • Member(s) declared answerable should necessarily be associated with the Firm either as partner or employee at the time of occurrence of alleged misconduct. • If no member – erstwhile or present, owns responsibility for alleged misconduct, then the Firm as a whole – partners and employees as on date of occurrence of alleged misconduct shall be responsible for answering the complaint. CA UTTAM AGARWAL

  12. Withdrawal of Complaint after application of mind permissible but not “information” • Withdrawal of complaint permissible but after application of mind and satisfaction of Board of Discipline or Disciplinary Committee. • Withdrawal of “information” not possible. CA UTTAM AGARWAL

  13. Timely non-removal of defect(s) in complaint would result in closure • Complainant given stipulated time for removal of defect(s). • Removal of defect(s) in person is permissible. • Non-removal of defect(s) within stipulated time would result in closure of complaint. CA UTTAM AGARWAL

  14. Anonymous “information” not to be entertained by Director (Discipline) • No anonymous “information” be entertained. CA UTTAM AGARWAL

  15. Undelivered notice or letter due to “addressee not found” • Where notice or letter sent to the parties is returned with the endorsement that “addressee cannot be found at the address given”, to seek correct address from other party/person, failing which (in the case of Respondent) to fix a copy thereof in conspicuous place at the professional or residential address of Respondent which was last registered or in such manner, as may be decided by Board of Discipline. Such service shall be deemed to be a sufficient service. CA UTTAM AGARWAL

  16. Time bar on entertaining complaint reduced to seven years • Time bar on entertainment of complaint is reduced to seven years from ten years. CA UTTAM AGARWAL

  17. Disposal procedure applicable to Board of Discipline • Board to follow summary disposal procedure. • Before hearing by Board, Respondent to file his Written Statement (again) within the stipulated time. • Additional time may be granted against adducing sufficient reasons and to the satisfaction of Board. • Additional time can be granted only once and if not adhered to, Board to presume that Respondent has no further submissions to make and accordingly to proceed further. CA UTTAM AGARWAL

  18. Disposal procedure applicable to Board of Discipline (contd…) • Respondent to send within the stipulated time copy of Written Statement to the Complainant and the Director together with support documents, if any. • The Complainant or Director may submit Rejoinder with a copy to Respondent with support documents, if any. • Board to fix hearing ordinarily not later than 45 days from date of receipt of prima facie opinion. • For the hearing, the parties and Director (Discipline) would be required to appear in person to make oral submissions. Appearance through an advocate or authorized representative who may be a Chartered Accountant, Cost Accountant or Company Secretary is permitted, unless directed otherwise. CA UTTAM AGARWAL

  19. Disposal procedure applicable to Board of Discipline (contd…) • If despite service of notice, Respondent does not appear either in person or through authorized representative, Board may either proceed ex-parte and pass order or fix fresh date of hearing. • Adjournment of hearing possible only once at any stage of proceedings. • If the Respondent is found guilty, an opportunity of being heard be given and if the Respondent does not appear on scheduled date and time, Board to presume that he has nothing more to represent and accordingly pass order. CA UTTAM AGARWAL

  20. Disposal Procedure applicable to Disciplinary Committee • While the procedure to be followed by the Board of Discipline and the Disciplinary Committee is by and large same, however, the following are specifically applicable to cases dealt with by the Disciplinary Committee:- •  Respondent to give a list of witness(es) [along with Written Statement and support documents, if any]. • If the Respondent does not appear in first hearing even after one adjournment, charges against him together with prima facie opinion be read out in his absence and the case proceeded with. CA UTTAM AGARWAL

  21. Disposal Procedure applicable to Disciplinary Committee (contd…) • Evidence of Director (Discipline) taken first including his witnesses, followed by evidence by the Complainant [subject to satisfaction that such evidence is relevant and has not been brought forward by Director (Discipline)] and lastly of the Respondent. • Witness of Director (Discipline) is eligible for reimbursement of expenses incurred for attending hearing. •  Director (Discipline) and the Respondent to present their arguments first and the Complainant to present his argument only if Committee feels that any vital argument has been left out by the Director (Discipline). • Inability of Complainant, Advocate, authorized representative or witness shall not be treated as valid reason for adjournment of case. CA UTTAM AGARWAL

  22. Central Government to be approached for clarification, in the absence of express provision • Wherever there is no express provision, reference to be made to the Central Government for clarification, whose decision shall be binding. CA UTTAM AGARWAL

  23. Thank You ! CA UTTAM AGARWAL

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