MERGER OF FIRMS – SENIORITY/ FIRM NAME ISSUES
To give boost to the capacity building of the Chartered Accountants firms, the Council in its 250th meeting held in April 2005 had approved a scheme envisaging merger of two or more firms of Chartered Accountants into one firm so that larger firms could come into existence.
The Council in its 280th meeting held in August, 2008 while considering issues relating to seniority of firm and name of the merged firm as a consequence to the merger of firms restated that as and when two or more firms of Chartered Accountants merge, the seniority of the oldest firm amongst the merging firms will be given to the merged firm and the merging firms will have flexibility to choose a name of the merged firm provided the provisions of the Regulation 190 are duly met and the seniority will be reflected as deemed seniority in the firm constitution certificate.
While considering a specific question as to whether such a decision will also apply to previous merger cases (i.e. prior to August 2008), the Council in its 288th meeting clarified that the decision already taken by it in its 250th meeting held in April 2005 will apply to all merger cases which had taken place effective from April 2005 onwards i.e. the decision be given effect retrospectively.
In other words, the principles of seniority and choosing the name of merged firm in accordance with the above decision of the Council will be effective in respect of all merger of Chartered Accountants firms which have taken place from April 2005 onwards.