What is Multidisciplinary/Mega Firm? Why do we need such firms, list the pre-requisites for such firms, benefits and risks? Benefits and Risks of Mega Firms

1. Lesson 23 : MEGA FIRMS
Company secretary is a key managerial person in a company, responsible to ensure the effective
and efficient administration of the company and certifying the company’s compliance with the
provision of the Act.
Limitations of a single practicing professional
1. Irregular Cash flows;
2. Capital Investment.
3. No limit on working hours .
4. Clients expect PCS 24*7;
5. No work No pay is a rule;
6. Need to continuously update knowledge;
7. No body to protect your mistakes,
8. Create own infrastructure
9. Has to have staff, their appointments, promotions, incentives, salaries, HR management;
10. Cannot directly or indirectly solicit clients.
11. No pension, no provident fund, no gratuity, no perquisites, no fringe benefits;
12. No Travel Benefits;
13. No paid leave, no leave travel concession, No casual leave, No sick leave;
14. Encroachment on family time
Rules, Regulations and Guidelines for PCS or Firm of PCS
• Company Secretaries Regulations, 1982
• Guidelines for requirement of maintenance of a register
• Guidelines for issuing compliance certificate and signing of annual return
• Guidelines for advertisement by Company Secretary in Practice
• Guidelines for compulsory attendance
• Mechanism for maintenance of attendance records
• Guidelines for peer review
• Guidelines for professional dress
• Guidelines for setting up and Conversion of Firms of PCS into LLP.
What is Multidisciplinary/Mega Firm?
Mega Firm is a Partnership firm with more than twenty five partners which provides core
professional service along with the allied and ancillary service under one roof.
Regulation 168B of Company Secretaries Regulations, 1982 states that person who is member of
below bodies can be partner
-The ICAI
-The ICWAI
-The Bar Council of India
-The Institute of Engineers
-The Indian Institute of Architects
-The Institute of Actuaries of India
-Professional bodies or institutions outside India recognised by the Indian Council.
Why do we need such firms, list the pre-requisites for such firms, benefits and
risks?
-The present needs of the corporate in the areas of Corporate Laws, Labour laws, RBI/ FEMA,
acting as Secretarial Audit, Resolution Professional Insolvency Bankruptcy Code, GST Practitioner .
-Assured of timely and quality service
-Several services are provided under one roof

2. It is a collaborative venture Therefore, every one wishing to join hands should understand that:
1. All minds should work together and in unison;
2. Say go to ego;
3. Mutual faith and respect
4. Unanimity on important policy decisions;
5. Financial discipline
6. Founder partners shall be given equal status;
7. Income of the firm shall be distributed at short regular intervals;
8. One shall not show that he is king pin of the association.
Benefits:
• Exposure to various and different expectations, needs, audience, products and services.
• Working in a team environment who share interests, expertise, ideas, and work ethically.
• The overheads and the risks get distributed amongst the partners.
• Appropriate revenue sharing model
• Systematic and cost effective processes
• Good training facilities whether on job training or off job training
• Continuous training by adapting to new trends
• Big growth opportunities with right work ethic and dedication
• Cost effective
• Developed infrastructure
• Credibility of the firm and brand gets established in long term.
Risk
1. Lack of understanding and multiplicity of directions to the staff could be disastrous.
2. More cost on infrastructure and technology.
3. Dominance of senior partners.
4. Defining exit route is difficult.
5. Lack of transparency may lead to disputes.
6. If cracks in mutual faith & trust, very difficult to cure.
7. Communication gap between partners
List Process of Formation and Agreement between Partners
-Ensure proposed constituents have expertise in different disciplines.
-Advised to work under MOU for one year
-All the founder partners should be on equal footing
-When it is proposed to add new partner it is suggested to enter into MOU at least for one year
and after understanding each others compatibility he or she may be admitted to the MDF
Management of Mega Firms: Short Note:
Skills include handling finance, dealing with human resources and day to day administration of the
office.
(a) Operational functions : Expertise in the domain areas by each of the partners is important
(b) Administrative functions :Partners should allocate administrative functions for day to day
functionality of the firm. (For example infrastructure availability-right from acquiring office
premises, handling reception, attending to calls, inward-outward, record keeping, PCs, library,
computer networking, office furniture, hardware, software, its maintenance, brand building, etc. )
(c) Human resources : The Mega firms over a period of time creates aa large pool of talented
people. They need to be offered extremely competitive salaries and benefits, career and learning
opportunities. Right from appointment of staff, promotions, incentives, salaries, HR management,
require proper knowledge of human resources skills

3. (d) Client relationship : client relationships to be treated as a strategic partnership, with flexibility,
transparency, and communication as paramount, than only investment in risk and reward is shared
only for the relationship to grow and prosper.
(e)Public Relationship and Brand building: A a PCS firm cannot advertise or solicit clients. There
cannot be a marketing department in MDF but there has to be PR department
Explain/Short Note Revenue Sharing Models of Mega Firm:
Adopt simple revenue sharing model to share profits and losses equally.
Each one brings equal business and generates equal revenue.
However, if it doesn’t happen there has to be a device “performance, contribution and efficiency
based” revenue sharing model
Example:
1. If a partner brings new client he shall be given referral share, say, @ 15% of the fees settled
and received either for one year or given number of years.
2. Say 15% shall be retained in business for meeting expenses;
3. 70% of the fees shall be given to the partner or partners who actually work on the assignment
(assignment share). When more than one partners are involved in an assignment their share can be
determined based on respective role.
4. At the year end after meeting expenses resultant profit shall be shared in proportion of
contribution of individual in the gross earnings/net profit of the firm.
5. Internally, different verticals can be created and surplus generated by each one can be assessed
as an independent cost centre.
This model motivates each partner to bring more and more business into the firm and also to work
for maximisation of his share and wealth of the firm.
There could be more tailor made revenue sharing models, however, the model based on
performance, contribution and efficiency is likely to work better.
IMP
1. Can there be a Partnership firm in between CA, CS, CWA, Advocate?
CA/CWA may become partners of PCS only for non attestation services and will not be able to sign
the Auditors report on behalf of the multidisciplinary firm.
2. How many Partners a PCS Partnership Firm can have ?
According to section 464(1) of the Companies Act,2013 the number of persons which may be
prescribed under this sub-section shall not exceed one hundred and further Companies
(Miscellaneous) Rules, 2014, provides not more than 50 persons for the purpose of carrying on
any business that has for its objects the acquisition of gain by the association or partnership or by
individual members thereof, unless it is registered as a company under the Act or is formed under
any other law for the time being in force.
3. Can there be a PCS LLP in between CA, CS, CWA, Advocate?
Yes
4. How many Partners LLP of Practicing professional can have ?
The minimum number of members of LLP under LLP Act, 2008 is two, there is no restriction on a
maximum number of members.
5. Can MEGA firm charge fees to the clients based on the result of the matter/ success of the
litigation?
Fees shall be charged for the professional work done

4. 6. Can a Mega Firm have branches within / outside India? What regulations guide operations of
such Branch office?
• As per Section 37(1) of the Company Secretaries Act, 1980 each one of branch offices must
be in the separate charge of a member of the Institute.
• Applications where there are few or no CS are decided by the Council on the merits
Conditions:
• The branch office shall be an independent office and not in the office of some other professional.
• One of the partners of the firm shall attend the branch office atleast 100 days in a financial
year.
•If a candidate who has passed Intermediate examination of the Institute and also completed
Management/Apprenticeship Training or has passed the Final Examination than one of the
partners of the firm shall attend the branch office atleast 60 days in the financial year.
• The approval shall be valid for a period of two years within which a member must be appointed
in the separate charge of the branch office.
• Section 37(2) requires to send to the Council a list of offices and the persons in charge thereof
and also to intimate any change within one month of such change

5. Agreement : partnership agreement defining inter alia the process of decision
making, allocation of duties, responsibilities, delegation of
authorities, revenue sharing and exit route.