In Brief
Multi-disciplinary Accounting Firms (MAFs) operating in India through Indian partner firms were found to be systematically violating the Chartered Accountants Act, 1949, FDI policy, and FEMA regulations through shared infrastructure, common brand names, and profit-sharing arrangements. The Supreme Court held that corporate personality cannot shield violation of statutory law. Even though partners are nominally Indian, when firms operate under foreign entity control with shared resources and remittances from abroad, this constitutes de facto violation of prohibitions on company practice and reciprocity principles. The Court directed constitution of a three-member expert committee to revisit regulatory oversight mechanisms, particularly for auditors, and ordered completion of pending investigations by the Enforcement Directorate and ICAI within three months.
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