Authentication of Cost Audit Report must be signed by a responsible partner in own hand on behalf of approved firm.
Where a firm of cost auditors is approved for appointment, the cost audit report must be signed in the partner's own hand by the partner responsible for the audit, for and on behalf of the approved firm; mere affixation of the firm's name is not acceptable.

Net worth computation for deposit limits uses latest audited figures; post balance sheet changes are ignored.
Permissible deposit limits under Rule 3(2)(ii) are to be computed from the aggregate of paid up share capital and free reserves in the latest audited balance sheet, reduced by accumulated losses, deferred revenue expenditure and intangible assets disclosed there; any changes after that balance sheet date are to be disregarded for reckoning the limits.

Audit fee fixation now requires companies to factor rising service costs and inflation when recommending statutory auditors' fees.
Boards of directors of Government and deemed Government companies must follow existing audit fee fixation norms when recommending appointment or re fixation of statutory auditors and explicitly take into account the effect of rising service costs and inflation as additional factors in suggesting the quantum of audit fees.

Board Approval Requirement: applications for exemption must state board consent and attach the board resolution.
Companies applying for exemption under section 211(4) must indicate whether the application has board approval and must forward a copy of the board resolution; the board bears the duty to prepare, present and authenticate the balance sheet and profit and loss account, and the Central Government may grant exemption on the board's application or with its consent.

Convertible debentures: only the convertible portion is exempt from deposit rules; unconverted portion becomes deposit after conversion period.
Only the convertible portion of partly convertible debentures is exempt from the deposit definition under rule 2(b)(x); any debenture portion that remains unconverted after the conversion period will acquire the character of a loan and fall within the definition of deposits unless it is secured by mortgage of immovable property as excluded by the rule.

Managerial remuneration rules: fresh consent and formal applications required for enhanced pay and perquisites under revised guidelines.
Revised managerial remuneration guidelines effective 1 April 1983 require fresh consent in the Department's revised format; earlier consents to 1978/1979 guidelines do not suffice. Any proposal to increase remuneration or perquisites (including higher gratuity) for the unexpired period of an existing sanction requires a fresh application under section 310 supported by a board resolution and compliance with prescribed notice procedures. Ex gratia payments are not permissible. Part A perquisites are subject to a ceiling of Rs. 45,000 or annual salary, Income tax Rules govern valuation of company housing (subject to a 10% salary cap), and salary excludes commission for terminal benefit eligibility.

Appointment of Cost Auditors in firm's name permitted if partners are practicing cost accountants and firm has central approval.
Approval is granted for the appointment of Cost Auditors in firm's name under sub section (2) of Section 233B of the Companies Act, 1956, conditional on all partners being practicing cost accountants under the Cost and Works Accountants Act, 1959, and the firm having been constituted with previous Central Government approval under the relevant regulation; companies may propose such appointments through their board and the Institute is requested to notify practitioners.

Full cost audit disclosure required; auditors must report complete cost account details and flag nondisclosure to authorities.
Section 233B and the Cost Audit (Report) Rules require appointed cost accountants to furnish full and complete details of a company's cost accounts in the cost audit report; requests to withhold particulars are inconsistent with those Rules and should be discouraged, and cost auditors should, where necessary, note such non-disclosure specifically to the government in their reports.

Proper books of account must be maintained in indelible ink, prohibiting pencil entries to ensure records' permanence.
Companies must prepare and maintain the books of account required by section 209 in indelible ink; pencil entries do not satisfy the statutory requirement that proper books of account be kept and that records be preserved in good order for the prescribed retention period.

Cost auditor independence: cost auditors must not serve as internal auditors during the period of their cost audit.
The Department advises that because the Cost Auditor must comment on the scope and performance of internal audit under the Cost Audit Report Rules, the Cost Auditor should not act as the company's internal auditor for the same period during which the cost audit is conducted.

Interest ceiling on deposits: compound or cumulative interest permitted if the offered rate at acceptance complies with the ceiling.
The Rules impose a ceiling on the rate of interest that a company may offer when accepting or renewing deposits; that ceiling applies at the point of acceptance. The Rules do not specify simple or compound interest, and the term "interest" is generic. Payment of compound interest or under a cumulative time deposit scheme does not contravene the ceiling provided the rate offered at acceptance does not exceed the prescribed limit.

Free reserve: surplus carried forward in profit and loss may qualify as free reserve if appropriated out of profits.
The amount shown as "surplus" in the profit and loss account under the heading "Reserve and Surplus" may be treated as part of free reserve under the Companies (Acceptance of Deposits) Rules, 1975 provided it arises by appropriation out of the profits of the company; amounts not so appropriated do not qualify.

Acceptability of offset-printed memorandum and articles affirmed for company registration, permitting registrars to accept such documents.
The circular concludes that memorandum and articles of association printed by offset printing are materially equivalent to conventional printing and present no objection to acceptance for company registration; registrars should accept such documents in form for filing absent other defects.

Service of special notice to retiring auditors should be sent by registered AD post to ensure effective proof of service.
The circular identifies that section 225(2) presents operational difficulties because copies of the special notice to retiring auditors are often not effectively served and lack proof of service; it accordingly advises that such copies be sent by registered AD post to create reliable evidence of service when appointing auditors other than the retiring auditors.

Corporate capacity limits: companies may not enter partnerships unless constitution expressly authorises it, and registration authorities must verify articles.
A company entering into a partnership is prima facie ultra vires unless its memorandum and articles of association expressly authorise such partnership; corporate participation requires specially drafted articles to address difficulties in applying Partnership Act provisions, and registration authorities must examine company constitutions for appropriate enabling and remedial provisions before registering firms with corporate partners.

Deduction of unprovided depreciation required when computing deposit acceptance limits for non-bank companies under Companies rules.
The amount of unprovided depreciation is to be treated as part of accumulated loss and therefore must be deducted from the aggregate of paid up share capital and free reserves, as shown in the latest audited balance sheet, when computing the limits up to which a non banking non financial company may accept deposits.

Finality of adopted annual accounts: adopted accounts cannot be reopened and amendment resolutions are invalid.
Accounts adopted and passed at an annual general meeting become final and cannot be reopened or revised in a subsequent meeting. A special resolution purporting to empower the company to amend or revise accounts already adopted is invalid and cannot override the rule of finality (noted as invalid under the provision cited in the correspondence).

Interim dividend: board may declare if authorised by articles, subject to regularisation by shareholders at the annual general meeting.
The board may pay an interim dividend if authorised by the articles of association, but any interim dividend must be regularised by the company in general meeting; the appropriate meeting for such regularisation is the annual general meeting because the profit for the financial year would not otherwise be known.

Promoter contributions exclusion from deposit definition: blanket exemption refused, government may grant individual exemptions under statute.
Promoter contributions constituted by unsecured loans to meet promoters' obligations under financial institution stipulations cannot be accorded a blanket exclusion from the deposit definition; the Government may, at its discretion, consider individual case exemptions under section 58A(8).

Printed memorandum requirement bars acceptance of photocopies for company registration, preserving statutory formality and filing standards.
The memorandum and articles of association must be in a printed form under the applicable Act; because the statute expressly requires printing, xerox or photocopies should not be accepted for the purposes of company registration, and filing officers must insist on the prescribed printed form.