Eight family companies called a chartered accountant a Director Simplicitor. The signatures on file said otherwise.

A Kolkata chartered accountant sat on the boards of eight private companies — some belonging to his own family, some to the family of his partner in the same accountancy firm.¹ A complaint from inside that partner's family told ICAI he was running those companies, not simply attending their meetings.²

What happened#

Two pieces of paper did most of the damage, and both carried his own signature.

The first was his tax record. His returns and Form 26AS, which he submitted himself to the Disciplinary Directorate, showed sitting fees for most years — but also certification charges from one company for Registrar of Companies filings across three assessment years, and interest on a loan he had made to another (paras 13–14). None of it was concealed. But a Director Simplicitor is meant to draw sitting fees and nothing else, and this record showed more than that.

The second was the companies' own filings about themselves. Two of the eight told the Registrar of Companies, over his signature, that they had nobody senior to their directors at all.³

"During the year, Mr. Sanjay Gopalal Mundra and [the Respondent] were the Directors of the Company. There was no appointment or resignation of directors or key managerial personnel during the year and the company does not have any key managerial person other than present directors." (para 12)

If a company has no manager above its directors, its directors are what runs it. Having signed exactly that declaration for two companies, he could not easily say he was there only to sit in on meetings.

The charge#

• Item (11) of Part I, read with Regulation 190A of the Chartered Accountants Regulations, 1988 — a chartered accountant in practice may not take up any business or occupation outside the profession unless the Council has specifically allowed it. Serving as an ordinary director who draws nothing beyond a sitting fee — a Director Simplicitor — is one of the standing exceptions the Council has already granted; anything more is not.⁴

The clause does not ask whether the eight companies were well run, or whether anything was taken from them. It asks only how much of their affairs the member actually carried. On that question the Board held him guilty.⁵

What the respondent said#

Three arguments carried his defence, and each was the kind anyone signing on behalf of a family company would reach for.

The signatures, he said, were compliance, not management. Company law requires at least one or two directors to sign a private company's annual accounts and reports, and in several of the eight companies he was one of only two directors on the board — sometimes the only one available, since his father, a co-director in one company, was suffering from Parkinson's disease and could not sign. Filing a form or certifying a resolution to meet a statutory deadline is a "ministerial act" that comes with the seat, he argued, not evidence of running the company (para 5).

The money, he said, was professional fee, not director's remuneration. The certification charges came from work his firm did for the company, permitted to a chartered accountant under company law's own carve-out for professional fees paid to a director; the interest was interest on a loan, not pay. Apart from sitting fees, he said, he took nothing from any of the eight companies for being their director (para 5(y)).

The complaint, he said, was old and retaliatory. Its allegations ran back to 2004 but were not brought until 2017, and only after he had ruled, as arbitrator, against the complainant's side of a family settlement. He called it "a clear case of counter blast" rather than a genuine grievance (para 5(l)–(m)).

What the Board held#

The Board decided the case, as it decides every disciplinary matter, on the balance of probabilities rather than to the criminal standard of beyond reasonable doubt (para 7.4). It rejected the delay argument first: a stale complaint is barred only if the delay has actually stopped the respondent from gathering his own evidence, and he had shown no such difficulty (para 7.2).

On the substance, the Board set out what a Director Simplicitor is required to be:

"(a) he is required to attend the Board meetings only.(emphasis provided) (b) He will not be paid any remuneration except the sitting fees for attending the Board meetings; and (c) He will be devoting his time for the company only to attend Board meetings and not for any other purpose. (emphasis provided)" (para 8)

Against that standard it weighed twenty-one documents the complainant had produced — directors' reports, financial statements, board resolutions and ROC forms bearing his signature across the eight companies (para 9) — and found he could not show that any financial statement had been signed by him only as an ordinary director alongside someone else acting as managing director; in several companies there was no managing director at all (paras 10–11). It read the two companies' own declarations that they had no key managerial person beyond their directors as further proof that the directors themselves supplied whatever management the companies had (para 12). It read the two companies' Articles of Association, which gave their directors "engagement and dismissal of the staff and of general direction and of management and superintendence of the business of the company," and held that this went "far away from the role of Director Simplicitor" (paras 16–17). And when the Board asked him directly how companies with nobody senior to their directors were run day to day, and who handled their banking, it found he "was unable to provide any justifiable clarifications/explanations" (para 18).

It concluded:

"the Board, viewed that it is conclusively proved that the role of the Respondent in the alleged companies clearly exceeded beyond that of the Director Simplicitor and he ought to have sought the prior permission of the Council before engaging himself in any business or occupation other than profession of Chartered Accountant. Accordingly, the Respondent is held Guilty in respect of the Charge alleged." (para 19)

And in its formal conclusion:

"The Board of Discipline, in view of the above, is of the considered view that the Respondent is Guilty of Professional Misconduct falling within the meaning of Item (11) of Part I of First Schedule to the Chartered Accountants Act 1949." (para 20)⁶

Where the case stands#

There is no punishment to report. ICAI's disciplinary process runs in two stages: Findings under Rule 14(9) settle guilt, and a separate hearing under Section 21A(3) fixes what follows it.⁷ This document is the first stage only — it ends at the finding of guilt and the Board's signatures, with no sentence attached, more than two years after the hearing that produced it had closed.⁸

No punishment order for this case appears on ICAI's Board of Discipline listings for the Council years 2024-25, 2025-26 or 2026-27, as checked on the date given below.⁹ A companion proceeding against his partner, over an overlapping set of directorships and the same clause, is in the same position.¹⁰

Why it matters#

This section is ours, not the Board's.

A Director Simplicitor's seat comes with a hard limit, and signing past it erases the exemption. Two companies' own filings declared, over his signature, that nobody senior to their directors existed — which made the directors the management. Sign only what the compliance actually requires, and let someone else sign the rest.

Fee income from a company you also direct can undo the same exemption. Sitting fees are protected; certification charges from a company whose board you sit on sat in the same tax return and counted against him. Keep a professional engagement and a director's seat with the same company apart, or give up one of them.

A finding of guilt is not the end of the file. Here it took over two years to be signed and issued, and still carries no punishment. Track a disciplinary case by both dates it can have — when guilt is decided, and when a sentence follows — not by the year printed on its number.

This summarises a public order and links the primary source. It is general information, not legal or professional advice.