I appreciate that this has probably been asked but after trawling through various posts I still can't quite get the answer.
We are in a position where there is merger ongoing with my company (A) and another company (B) . B wants to perform work for clients which would be deemed public practice under ACCA definitions.
I work for A and is a similar business to B, however the directors of A are ICAEW qualified and hold PCs and I'm an employee of A and ACCA qualified and hold a PC, so we have covered our bases anyway. No one else employed in A holds a PC despite them being qualified as there are 2 principals and a senior employee (me) holding them and responsible for the work that is being done.
B is a limited company and has one director, that is not an accountant and therefore not qualified nor can be and hold a PC
The most senior person in B is ACCA qualified (10+ years) and would be responsibile for the accounting work that is being prepared. They do not hold a PC. The question I am trying to answer is does the ACCA qualified individual need a PC as they are perfoming work that would require one or because the principal of B isn't an accountant it doesn't need one. If they do need a PC, they will struggle as not worked in an approved employer, so there is scope for me to join as a director of B (subject to my own due diligence) and then B taking advantage of my PC, which we believe would alleviate the issue.
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I would want to be sufficiently well remunerated (over and above the day job) before that is the sort of thing I would 'share' so to speak.
Sounds more like a problem for the ACCA person in Co B to fix.
No the individual does not need a practicing certificate if they are employed. If the director is not qualified then ACCA cannot issue that company a practicing certificate.
As the companies are merged you need to check with ICAEW if that causes an issue with the practice certificate of A.
Don't know why my comment didn't appear but I'll post again.
If the employee is a genuine employee and is not holding themselves out to be the principal / director of the firm then they do not need to have a practicing certificate. If the clients believe this member to be the principal or it is effectively a sham employment then the employee would be deemed to require a practice licence.
Who is sorting this out?
Only principals need practicing certificates, employees are completely irrelevant
A director is a principal
Both ICAEW and ACCA have rules
A shareholder with a trivial shareholding and not a director does not even need to be a member
Sorting this stuff is for the directors, principals and shareholders to get organised correctly. Unless you know the exact detailed plan, you cannot help
I am ICAEW with 4 other persons holding trivial numbers of shares
None of them have a full qualification
But we are compliantly a firm of Chartered accountants because I am the only director with most of the shares
Sort it out with ACCA
As I understand the ICAEW, A shareholder who is a member ought to have a PC, but subject to........
Not aware of company PC. Does ACCA have such a thing?
If you are checking it out then you should know who the directors will be and who owns what shares
That should be enough for the ACCA to get advice
The ICAEW man needs to do his own checks. If he gets it wrong it is his problem, not the company. ICAEW are hot on maximising penalties and costs, so he really needs to check
Aweb list every ICAEW disciplinary, but cannot be bothered with ACCA as most of them are foreign students caught cheating in exams, and there are just so many.
1. 'There is no such thing as a merger...'. this sounds more like it is effectively a purchase/takeover of A by B
2. Is B already performing 'work that would be deemed public practice' or is the combination with A a means to that end? Does B's owner even agree this is an issue?
If you are a shareholder (and key employee it appears) you should be able to get answers from the principals as to what the regulatory status of the firm will be post-combination and for them to demonstrate how that fits with the rules of the relevant institute. If they say 'it doesn't apply to us' or 'you'll have to sort that out', beware...
What is the work that is being provided by the employee? Are they signing off accounts?
The onus may be on the employee on a personal level to avoid any disciplinary action but on a company level it is entirely up to the owners of the business to ensure compliance. Who owns the parent? I think ICAEW may need to be consulted here in addition to ACCA.
A can of worms
I assume Co A is regulated by ICAEW
I assume Co B is unregulated, and has HMRC as the AML Regulator
The employee of B is irrelevant
This is an ICAEW problem to resolve
And I suggest that the issue is resolved before the group is formed
The ICAEW members of parent co need to advise ICAEW correctly and quickly
The time limit is something like 14 days
And ICAEW likes to penalty farm on simple errors
To be a principal in a firm of Chartered accountants requires an ICAEW membership to be agreed so that ICAEW can penalise ALL members. It is money not exams, with no entitlement to claim membership or use the designation. Just be exposed to penalties, fines, costs and public humiliation on Aweb
Be very wary, @nicol, of any pressure being put on you.
I note you are a 'senior employee' but not actually a director. We have all been there at one point or another. One can end up in invidious positions of maybe taking the flak for something whilst never enjoying any upside, or actually having proper control.
All sounds very complicated, with overseas parents and everything..
At the end of the day you don't want to jeopardise your own good standing with ACCA for someone else's plaything..
I agree with everything apart from third para, as im not convinced there will be (m)any ICAEW members of parent co.
The OP says above that he is a 'significant enough shareholder' to have an input but also refers to the overseas co as the company's "new masters" who, i believe he says elsewhere no (current, at least) qualifications and/or memberships.
My assumption from that is that this might not be an ICAEW issue for very long as it will cease to be an ICAEW regulated practice if it doesn't tick the following boxes:
- 50 per cent or more of the directors are members; and
- more than 50 per cent of nominal value of the voting shares is held by members; and
- more than 50 per cent of the aggregate in nominal value of the voting and non-voting shares are held by members
Maybe I've got the wrong end of the stick but on the limited info available I'd be quite nervous about being a part of this (dont let that put yo off OP - im sure you know far more about the detail than youve shared here and that there's an upside for you. I've just seen a couple of firms absorbed where, shall we say, 'wealthy overseas outsourcers' have become bored of taking a slice of the pie and have gone into the acquisitions market to try and scoop up most of it - not the type of firm I'd want to be a part of if I'm honest).
Agree
This question is now so far distant from opening question as to be a completely different question
PARENT is that parent going to be 100% owner of both companies?
It now looks to me to be an avoidance of regulation by design
I see much more simple versions on the odd few departing clients.
Recently saw one where the former qualified accountant director/shareholder chose to become an employee (not director) in the company now owned by an unqualified with the same surname
Regulatory risks seriously curtailed, but employee still able to do references as a qualified.
Difficult to criticise the choice to get rid of regulation
Just not what I would choose to do