A practising Chartered Accountant can generally accept a company directorship when the role is truly a Director Simplicitor, but the label on the appointment letter is not enough. The current ICAI Code of Ethics, 13th edition defines the permitted role narrowly. It is an ordinary director who is not a Managing Director or Whole-time Director, is required only for Board meetings, and receives no remuneration other than for attending those meetings. The same Code says specific Council permission is generally not required for that role unless the member or any partner is interested in the company as an auditor.
This is a role-classification problem before it becomes an audit problem. A practising CA should test the actual duties, management authority, remuneration and audit relationships before accepting the appointment. The ICAI announcement bringing the revised Code into force states that the 13th edition is applicable from 1 April 2026, so older summaries should not be used without checking them against the current text.
What will you actually do after appointment?
The safest question is not, “Does the company call me an independent director?” It is, “What will I be expected to do after appointment?” ICAI's Director Simplicitor definition points to a board-level role rather than an operating-management role. A role that includes running a division, approving day-to-day transactions, controlling staff or acting as an executive signatory needs closer review. A non-executive label should not be used to bypass the limits of the general permission.
| Fact pattern. | What it suggests. | What to do before accepting. |
|---|---|---|
| Board meetings only, no operating role, and only sitting fees. | This fits the ICAI description of Director Simplicitor, subject to the audit-conflict condition. | Document the duties, remuneration and audit relationships. |
| Regular management responsibility or authority over operations. | This may fall outside Director Simplicitor even if the title says non-executive. | Resolve the ICAI permission and practice-status position before appointment. |
| Managing Director or Whole-time Director role. | ICAI deals with this executive office separately. | Specific and prior Council approval is required, subject to the other conditions in the Code. |
| An audit relationship exists with the same company through the member or a partner. | The directorship and audit roles conflict. | Do not rely on the general Director Simplicitor permission. |
When Director Simplicitor is generally permitted
The 2026 Code says a member in practice is generally permitted to be a Director Simplicitor in a company, including a board-managed company, without specific Council permission. The permission is tied to the nature of the role: ordinary director, no Managing Director or Whole-time Director position, Board-meeting participation rather than day-to-day management, and remuneration limited to attendance at those meetings.
That definition makes the appointment letter and Board charter important evidence. If the paperwork says “non-executive director” but a separate consultancy agreement gives the member operational authority or recurring executive duties, the whole arrangement should be examined together. Substance should not be replaced by a convenient designation.
A directorship also needs to be separated from employment. A member considering a salaried or executive corporate role should review the separate Certificate of Practice and employment rules, because employment, main occupation, attest eligibility and articleship consequences involve a different analysis from a Board-only Director Simplicitor role.
ICAI permission to sit on a Board is not, by itself, eligibility for an independent director appointment under company law. Where an independent-director seat is proposed, the company and the candidate must separately examine Section 149(6) of the Companies Act, 2013, the applicable independent-director databank requirements and the statutory appointment process. These checks are distinct from whether the member can retain the right to practise. The independent-director appointment and eligibility guide covers that company-law side in detail.
Managing Director and Whole-time Director need a different analysis
The Code deals with Managing Director and Whole-time Director positions separately. It states that a member can accept such an office only after obtaining the specific and prior approval of the Council. A person may also be treated as a managing director under the Companies Act, 2013 without that exact designation. The Code points to the case where the person is entrusted with the whole or substantially the whole of the management of the company's affairs.
That is why an “adviser-director” or “non-executive” title should not be accepted at face value where the actual authority is executive. Before signing, read the appointment terms, delegation of authority, bank-signing powers, reporting lines, expected time commitment and any side agreement. If those documents give the member substantial management responsibility, the role should be cleared on its real substance.
The same part of the Code states that a member cannot hold the office of Managing Director or Whole-time Director in a company if the member or any partner is interested in that company as an auditor. It also says that a Certificate of Practice holder who engages in another business or occupation is treated as being in part-time practice. A member who is not entitled to perform attest functions is not entitled to train articled assistants. An executive appointment can therefore have consequences beyond the directorship itself.
There is a narrowly defined corporate-form route that should not be confused with an ordinary commercial executive job. Under ICAI's Guidelines for Practice in Corporate Form, a qualifying member may be a Managing Director, Whole-time Director or Manager of a company engaged exclusively in ICAI-permitted Management Consultancy and Other Services and retain a full-time Certificate of Practice, subject to the scheme's conditions. The consultancy company itself cannot carry on an audit practice; any permitted attest work continues through the member's individual or CA-firm practice. Nor does this route permit running an unrelated trading or manufacturing business while keeping unrestricted attest rights.
Audit independence can block an otherwise permitted directorship
The audit check must cover more than the exact company name. The ICAI's recent Ethical Standards Board decisions permit a member in practice to be a non-executive or independent director in a co-operative bank when there is no day-to-day involvement. The decision also requires that neither the member nor any partner be interested in the bank as auditor. The same ICAI page says a practising CA who is a non-executive director in a company, or the CA's firm, should not accept statutory audit of a joint venture of that company because independence would be affected.
ICAI has also considered group-company conflicts. In its decision on whether an auditor of a subsidiary can be a director of the holding company, the Institute said the arrangement is not permissible because it affects auditor independence. The ICAI independence decision on a subsidiary auditor and holding-company directorship is a useful reminder that an engagement-acceptance check should look across holding companies, subsidiaries and joint ventures, not only at the entity offering the Board seat.
This also connects with the wider independence work firms should perform under the current ethics framework. The 13th-edition practice review priorities explain why firms need current client and service inventories rather than engagement-by-engagement memory when assessing conflicts.
Leaving the Board does not clear the audit conflict immediately
The independence check does not end when the director resigns. Paragraph 2.15.1.4(xv) of ICAI's 2026 Code of Ethics, Volume I (printed page 124), provides that a member must not accept an audit assignment of the same company for two years from the date their tenure as director ends. A CA who steps down in September 2026 therefore cannot accept that company's December 2026 audit merely because the resignation has been recorded.
Before taking on the audit, retain evidence of the date the directorship ended and check the two-year period. The expiry of that period is not automatic clearance: other independence issues and the Companies Act, 2013, still need to be reviewed.
A Director Simplicitor should not sign the company's ROC forms
A Board seat can create a second conflict even where the firm is not the company's auditor. ICAI's recent decisions specifically state that a Chartered Accountant in practice who is a Director Simplicitor in a company cannot sign that company's ROC forms because it is a direct conflict of role.
This is easy to miss in a smaller company. Management may ask the CA-director to sign a filing “because you are a CA” after the appointment. The professional qualification does not turn a conflicted act into a permitted certification. The member should decide the signing boundary before appointment and ensure the company has another eligible professional or signatory route for filings that would put the CA on both sides of the same matter.
Three appointment scenarios show where the line moves
Scenario 1: Board adviser with sitting fees only
A practising CA is invited to join a manufacturing company's Board. The CA attends quarterly Board meetings, has no employment contract, does not supervise staff, has no bank-signing power and receives only sitting fees. Neither the member nor any partner audits the company. On those stated facts, the role closely matches ICAI's Director Simplicitor description. Keep the appointment terms and the audit-conflict check in the acceptance file.
Scenario 2: “Non-executive” title but operating authority
A company calls the role non-executive, but the CA is expected to approve payments, supervise the finance head, negotiate borrowing terms every month and exercise delegated authority between Board meetings. The title points one way while the duties point another. Do not treat the Director Simplicitor general permission as a shortcut. The exact role should be assessed under the current Code, and any required specific Council approval and practice-status consequences should be resolved before the appointment begins.
Scenario 3: Board role followed by a group audit offer
A practising CA becomes a non-executive director of Company A. Later, the CA's firm is offered the statutory audit of a joint venture of Company A. ICAI's published decision says that this audit should not be accepted because the directorship affects independence. A clean acceptance process should therefore ask about Board positions held by partners before a new audit is approved, rather than discovering the relationship after engagement terms are agreed.
Build a short acceptance file before saying yes
A practising CA does not need a large memo for every Board invitation, but the file should be good enough to show why the role was classified correctly. Capture the following before acceptance:
- Keep the appointment letter, Board charter and any consultancy, employment or advisory agreement connected with the role.
- Record the actual duties between Board meetings, including management authority, staff supervision and signing powers.
- Record the remuneration structure, separating sitting fees from salary, retainers or other recurring payments.
- Check all audit relationships of the member and partners with the company and relevant group entities, including subsidiaries and joint ventures.
- Confirm whether the company expects the CA-director to sign ROC forms, certificates or other filings in a professional capacity.
- Decide whether the role needs specific and prior Council approval, particularly if it is executive or carries substantial management responsibility.
- Record the effect, if any, on full-time practice, attest functions and existing articled assistants.
Where the facts are ambiguous, keep the uncertainty visible instead of forcing the role into a convenient label. Obtain the current ICAI position before commencement, and preserve the documents on which the conclusion was based. If the duties later expand from Board oversight into management, repeat the assessment at that point rather than relying indefinitely on the original appointment title.
