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Alignment to underpin disciplinary mechanism for Chartered Accountants, Cost and Works Accountants and Company Secretaries via. (Amendment) Act, 2022

December 17, 2021

Introduced in Lok Sabha

March 30, 2022

Passed in Lok Sabha

April 05, 2022

Passed in Rajya Sabha

April 18, 2022

Akshit Rai
Akshit Rai

Published on: Jul 8, 2022

Anmol Pareek
Anmol Pareek

Updated on: Nov 28, 2022

(83 Ratings)

The Bill has been notified on 18th April, 2022 which is now known as the “CA, CWA and CS Act, 2022“.

The Bill was presented in response to a surge in corporate fraud in India over the years. The out-turn of corporate scams like Jet Airways Scam, Punjab National Bank Scam, PwC Scam, which have not been forgotten and investigations into these companies are still underway which has harmed public trust and the people’s capacity to fully rely on the corporate world. The statutes substantially contours the obligations, standards, and procedures that professionals like Chartered Accountants, Company Secretaries and Cost Work Accountants are supposed to follow.

The Government has created legislation to develop and regulate professions such as CA, CWA and CS to ensure transparency in the mechanism. These professions are currently governed by the following Acts:

  • The Chartered Accountants Act, 1949, (hereinafter referred as CA, Act 1949)
  • The Cost and Works Accountants Act, 1959 and (hereinafter referred as CWA Act, 1959)
  • The Company Secretaries Act, 1980 (hereinafter referred as CS Act, 1980)

The key amendments include register/registration of firms, composition of the Board of Discipline and Disciplinary Committee (DC), and the Constitution of a Coordination Committee, etc. which are as discussed below.


Under CA Act, 1949, CWA Act, 1959 and CS Act, 1980, the following amendments have been made:

  • The committee will be responsible for the development and harmonization and also of the duties allocated to each Institute, as well as the effective coordination of functions.
  • The committee shall consist of the President, Vice-President and the Secretary of the council of each Institute. The committee will convene once per quarter, and the Secretary of the Ministry of Corporate Affairs will lead the meeting.
  • Previously, each of the 3 institutions had its own disciplinary committee, whose function was to take action against the person who had committed an unlawful conduct in any of the 3 professions. Now the Act has brought a change in the disciplinary mechanism and actions can be brought against the firms as well.
  • The government has decided that the majority of the members would be government representatives, i.e. Non-CA/CS/CWA, while the remaining members would be CA/CS/CWA depending upon the institute in which the disciplinary action is taking place.
  • The disciplinary proceedings will be faceless proceedings and virtual hearings will take place.
  • The members or firm against whom disciplinary action has been initiated must submit a written statement within 20 days after receiving the preliminary examination report from the Director, which may be extended for an additional 20 days in exceptional cases.
  • The investigation must be completed within 90 days of receiving the Director’s preliminary examination report and if the member or the firm is found guilty in both First Schedule and Second Schedule, an order must be issued within 30 days after the members or firm have been given the opportunity of being heard. A disciplinary action can directly be taken against a firm, if a Partner or Owner of a firm is repeatedly found guilty of misconduct during the last 5 years.
  • Firms must now register with the Institutes and the Council may refuse to register a firm if the name of such firm is identical or similar to the name of any other firm already registered, or the name is in use by any firm within or outside India, or registration of the firm is undesirable in the Council’s opinion and if in case any firm is aggrieved by the decision, they can apply for the review before the Council within 1 month from the refusal date.
  • The Councils shall keep a register/record of firms that includes information such as the status of any actionable complaint or the imposition of a penalty.


Under CA Act, 1949, CWA Act, 1959 and CS Act, 1980, the following amendments have been made:

S.No. Penalty Description Previous Penalty Amended Penalty
1 For Professional and other Misconduct, the Board of Discipline may take the following actions:
  1. reprimand the member
  2. removes the member from the Register up to a period as specified
  3. imposes such fine as it may think fit which may extend to Rupees as specified
Removal of name for 3 months; Rs. 1 lakh.
Previously, there were no such provisions for repeated offenders.
  1. Removal of name for 6 months; Rs. 2 lakhs [Section 21A(5)]
  2. For repeated offenders, the amount of fine may extend to Rs. 25 Lakhs. [Section 21A(6)]
2 For Professional and other Misconduct, the Disciplinary Committee may take the following actions
  1. reprimand the member
  2. remove the name of the member from the Register permanently or for such period, as it thinks fit
  3. impose such fine as it may think fit, which may extend to Rupees as specified
Rs. 5 Lakhs
Previously, there were no such provisions for repeated offenders.
  1. Rs. 10 Lakhs [Section 21B(5)]
  2. For repeated offenders, the Disciplinary Committee may cancel the registration of firm or prohibit the firm from undertaking any activity and impose fine which may extend to Rs. 50 Lakhs. [Section 21B(6)]
3 Penalty for falsely claiming to be a member on first conviction shall be punishable with fine (as specified for first offence), which may extend to, and on any subsequent conviction with imprisonment which may extend to six months or with fine which may extend to (as specified for subsequent penalty), or with both. Rs. 1000/- (First Offence); Rs. 5000/- (Subsequent Penalty) Rs. 1 Lakh (First Offence); Rs. 5 Lakhs (Subsequent Penalty) (Section 24)


  1. VIVO Scam, 2022
    Vivo Mobiles Pvt. Ltd was incorporated in 2014, as a subsidiary of a Hong-Kong based company. Recently, to avoid getting taxed in India, Vivo sent a whopping Rs. 62,476 Cr worth turnover to China. The money is almost half of Vivo’s turnover of Rs. 1,25,185. On July 5, 2022, ED raided 48 locations of Vivo Mobiles India Pvt. Ltd. and its associated companies across the country. Indian Intelligence Services also found that the data of domestic customers was being illegally transferred by Chinese Companies to servers kept in that country. 2 Professional Chartered Accountants and a Professional Company Secretary are under the scanner of the investigators. The documents were forged and filled with false information by the 3 professionals. The probe also revealed that the Professional Chartered Accountants facilitated incorporation of the company by witnessing the signature and documents of the Chinese nationals. The 3 professionals also failed to verify the documents and comply with the legal requirements under the Companies Act. Non-Compliances of law by a Professional CA or CS is a serious offence.
    Sources: Newspaper Publication
  2. Gurugram GST Scam: Bail Denied to CA by Gurugram Court
    Recently, in the case of CGST, Gurugram. Vs. Sunil Mehlawat the Court has denied bail to the accused. The accused was practicing as a Professional for the past 6 years. The bench (ACJM) observed that the Professional is involved in causing a loss to the government treasury amounting to Rs.7,60,89,626/ Thus, he has committed an offence under Section 132 (1)(i) read with 132(1)(b), 132(1)(c), 132(1)(e) and 132(1)(f) CGST Act 2017. He has actively participated in the preparation of forged certificates for bogus or non-existent companies to claim a GST refund, causing loss to the public and affecting the economy of the country. So, from this case study, we can clearly see that the court’s approach toward culprits is conscientious and rigid.
    Sources: Newspaper Publication


The Act states that the Presiding Officers of the Committees will not be members of all the 3 Institutes. Therefore, there are two perspectives of the same as this may be against the interest of the members of the Institutes. Secondly, the Government is trying to neutralize the process as there will be no biasness regarding the disciplinary action taken by the committee.

Regarding Coordination Committee, the Government is trying to create a Coordination Committee with respect to all the 3 Institutes. However, there is a probability the functions proposed for the Coordination Committee may overlap with the current norms of the 3 Institutes and the Councils as the 3 Institutes also have committees for coordinating among themselves. With respect to disclosure of pending complaints or actionable information against members of the Institutes and firms registered with them which may harm the reputation of the Registered firms.

Data Source: Ministry of Law and Justice and leading publications


The information provided in this article is intended for general informational purposes only and should not be construed as legal advice. The content of this article is not intended to create and receipt of it does not constitute any relationship. Readers should not act upon this information without seeking professional legal counsel.

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