Strict Compliance - Clarification of documents related to incorporation of a Company or LLP by Practicing Professionals

Last updated: 29 April 2022

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The Institute of Chartered Accountants of India (ICAI) has issued a crucial announcement regarding the incorporation of Companies and Limited Liability Partnerships (LLPs). The Ministry of Corporate Affairs (MCA) has noted instances where practising professionals are not conducting adequate due diligence and verification during these processes. Professionals are reminded to strictly adhere to legal requirements for verifying director details, key managerial personnel, MoA/AoA witnesses, and registered office details to prevent potential penalties.

Corporate Laws & Corporate Governance Committee
The Institute of Chartered Accountants of India
28th April, 2022
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ANNOUNCEMENT

Sub: Important Message: Strict Compliance - regarding Verification/ Clarification of documents related to incorporation of a Company or an LLP by Practicing Professionals.

Company and LLP Incorporation: Professional Compliance Update

The MCA has communicated to ICAI that instances have been observed where practising professionals are not carrying out Due Diligence and Verification while carrying out incorporation of Company / LLP. The Verification of documents pertaining to Directors, KMP, witness to MoA, AoA and verification of Registered Office are required to be done in strict accordance with the provisions of Law.

Members may accordingly ensure strict compliance to avoid penal actions.

Sincerely Yours,

Chairperson and Vice Chairperson
Corporate Laws & Corporate Governance Committee
The Institute of Chartered Accountants of India

FAQ :

The MCA has observed that practising professionals are not always carrying out proper due diligence and verification when incorporating companies or LLPs.

Verification is required for documents pertaining to Directors, Key Managerial Personnel (KMP), witnesses to the Memorandum of Association (MoA) and Articles of Association (AoA), and the Registered Office.

The clarification is being issued by the Corporate Laws & Corporate Governance Committee of The Institute of Chartered Accountants of India (ICAI).

Practising professionals who do not ensure strict compliance with the verification requirements may face penal actions.

The key message is to ensure strict compliance with due diligence and verification procedures for Company and LLP incorporations as per the law.

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