Chartered AccountantAt the same time, the regulator for chartered accountants has decided to ensure that one name is restricted for use by one entity, ICAI president G Ramaswamy told TOI over phone. So, a firm will have to stick to a name like XYZ instead of setting up several firms with names such as XYZ India, XYZ Delhi and XYZ Mumbai. The move is likely to impact PriceWaterhouse, which at present operates in India through half-a-dozen firms. PriceWaterhouse had registered several entities as a firm can at best have 20 partners. The auditor was expected to convert into an LLP and consolidate its operations under one entity.
Other large global audit firms are not permitted to operate in India and they have alliances with local entities for audit purposes. For long, ICAI has been trying to plug loopholes to check their operations in India. The institute has argued that foreign firms should not be allowed in the country as developed countries did not provide reciprocal benefits to Indian entities.
An LLP gives business the benefits of limited liability while allowing its members the flexibility for organizing their internal structure as a partnership. While the LLP Act was cleared by Parliament three years ago, the first such firm was registered in 2009. But audit firms had been kept out as ICAI had to amend the rules.
During a meeting of ICAI Council last week, the proposal to allow firms to convert into an LLP was approved and the rules would be notified over the next few days.
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