The Institute of Chartered Accountants of India (ICAI)’s Disciplinary Committee (Bench-II) has exonerated CA Mayank Garg (M. No. 547848), partner at PSMG & Associates, Dehradun, of allegations of professional misconduct in a high-profile case concerning the appointment of a Chinese national as director in an Indian company without security clearance.
The Disciplinary Committee comprising of CA Charanjot Singh Nanda (Presiding Officer), CMA Chandra Wadhwa, CA Pramod Jain, CA Mahesh Shah, and CA Ravi Kumar Patwa, after multiple hearings and examination of submissions, held that the requirement for security clearance under Rule 10(1) was limited to applications for allotment of new DINs through Form DIR-3, not for director appointments through Form DIR-12. Mr. Qian’s DIN was issued prior to the rule’s enforcement on June 1, 2022. No amendment had been made in Form DIR-2 (consent to act as director) at the time of certification to include the new declaration clause regarding security clearance. The respondent verified relevant identity documents—passport, visa, PAN, and Aadhaar—and acted with reasonable professional diligence.
The proceedings stemmed from a complaint filed by Ms. Seema Rath, Registrar of Companies (RoC), Kanpur, Ministry of Corporate Affairs (MCA), who alleged that Garg had certified Form DIR-12 for Mr. Dawei Qian, a Chinese national appointed as director of Fuhong Tech India Private Limited, without ensuring that the required security clearance from the Ministry of Home Affairs (MHA) was obtained, as mandated under the Companies (Appointment and Qualification of Directors) Amendment Rules, 2022.
The MCA had earlier identified instances of Chinese nationals and entities using forged documents and dummy directors to incorporate companies in India, prompting stricter compliance checks. Rule 10(1) of the amended Companies (Appointment and Qualification of Directors) Rules mandates that individuals from countries sharing a land border with India—such as China—must obtain MHA security clearance before appointment as directors.
In this context, the RoC alleged that Garg failed to exercise due diligence while certifying the DIR-12 e-form containing a false declaration that Mr. Qian was “not required to obtain security clearance.”
CA Garg argued that Mr. Qian’s Director Identification Number (DIN 09428363) had been allotted in December 2021, prior to the enforcement of the 2022 amendment. The requirement of security clearance under Rule 10(1) applied only to applications for new DINs and not to appointments of existing directors. The director had valid PAN, Aadhaar, and an Indian residence visa, and had already served as a director in another Indian company, Hye Woo Printing India Pvt. Ltd., since December 2021.
Garg had sought written clarification from the company’s board via letter dated September 1, 2023, to which the company responded that security clearance was “not applicable.”
The Committee concluded that CA Mayank Garg had exercised due diligence and had not certified any false information. He was, therefore, held not guilty of professional misconduct under Item (7) of Part I of the Second Schedule to the Chartered Accountants Act, 1949—which pertains to “failure to exercise due diligence or gross negligence in the conduct of professional duties.”
The Committee, comprising CA Charanjot Singh Nanda (Presiding Officer), CMA Chandra Wadhwa, CA Pramod Jain, CA Mahesh Shah, and CA Ravi Kumar Patwa, ordered the closure of the case on September 21, 2025.
Case Details
Case Title: Ms. Seema Rath Versus CA. Mayank Garg
Date: 21/09/2025
