Dividend reserve obligations require transfers from after-tax current profits and exclude certain reserve categories from compliance.
Obligations require providing arrears of depreciation before computing profits for reserve transfer; current profits mean after tax profits after statutory transfer to development rebate reserve. Dividend reference includes equity and participating preference dividends. Transfers to development rebate, capital or special reserves do not meet the transfer requirement. No transfer is required if proposed dividend is under ten percent; a company may voluntarily transfer a higher percentage. Declaration is necessary for rule 3(i). Rules coexist with the Temporary Restrictions on Dividend Act where consistent, and carrying forward remaining profits is permitted. Query on excluding no dividend years answered in the negative.

Statutory auditors' remuneration: boards must justify fees by measurable company activity and audit workload.
Boards must recommend auditors' fees to the Company Law Board based on a comparative assessment of company activity or since the last revision, using specified indicators (production/sales, purchases, revenue expenditure, capital employed, fixed assets, investments, loans and transaction volumes) and audit workload metrics (vouchers, decentralisation, man hours, internal audit presence, and supplementary reporting obligations); fees for current financial years should be estimated from expected activity, substantive remuneration should exclude TA/DA and incidental expenses, and first year/project audits should use budgeted minimum activity to avoid excessive fees.

Director commission approval limited to companies without a managing director where directors perform specific duties and may receive regulatory sanction.
Commission to directors is treated differently depending on management structure: when a company has a managing/whole time director the Department is not in favour of permitting commission to ordinary directors; by contrast, where no managing/whole time director exists and specific duties have been entrusted to directors, the Department permits commission at 1 per cent subject to a ceiling of Rs. 10,000 per annum.

Beneficial interest in shares: pledgee files Form I for transferred legal title; beneficial owner files Form II declaring ownership.
Clarifies that when pledged shares are transferred to a bank's name the bank files Form I to reflect legal title, while the customer retains the beneficial interest and must file Form II as the beneficial owner; banks should not claim beneficial interest for pledgee purposes for requiring customers to certify contrary statements.

Government ownership classification clarifies which public financial corporations qualify as owned or controlled under section 619B.
The circular clarifies that, for section 619B, nationalised banks, the General Insurance Corporation of India, Life Insurance Corporation of India and the Industrial Development Bank of India are regarded as owned or controlled by the Central Government, while cooperative institutions, Industrial Credit & Investment Corporation of India, Unit Trust of India and Industrial Finance Corporation are excluded; the list is illustrative and not exhaustive.

Voluntary higher reserve transfers permitted subject to government rules, proviso enables transfers beyond the prescribed limit.
Section 205(2A) includes a proviso enabling a company to make a voluntary transfer of a higher percentage of annual profits to reserves, subject to rules made by the Central Government; the department confirmed the proviso is not a drafting error and that voluntary higher transfers remain permissible in accordance with those rules.

Invitation to deposit requires a valid advertisement; renewal or maturity notices constitute invitations and trigger compliance.
An intimation to a depositor on the eve of maturity indicating the maturity date and stating the depositor may renew is treated as an invitation to accept deposits and therefore requires the company to have a valid advertisement in force complying with the Companies (Acceptance of Deposits) Rules, 1975 before issuing such communication.

Prohibition on directors holding office of profit: entitlement based remuneration does not convert position into office of profit.
The prohibition on a director holding an office or place of profit depends on whether the director receives remuneration over and above the pay to which he is entitled as a managing or whole time director; remuneration that is the director's entitled pay does not make the position an office or place of profit for the prohibition to apply.

Profits after tax determine reserve transfers for dividends; current profits include prior year adjustments and reserve writebacks.
The Transfer of Profits to Reserves Rules require the percentage transfer to be calculated on current profits, which must be read as profits after tax. Accounting items such as the write back of a development rebate reserve and adjustments relating to previous years must be included when determining those current profits for the purpose of the mandatory reserve transfer.

Acceptance of deposits rule: companies not accepting deposits need not file a nil return under the deposits rules.
The Companies (Acceptance of Deposits) Rules, 1975 apply only where a company accepts deposits within the meaning of the Rules; therefore a company that does not accept deposits is not obliged to submit a nil return under rule 10 to the Registrar of Companies.

Fees on applications by liquidators: no payment required where rules charge companies not liquidators for winding up.
The Rules require payment of fees by companies and not by liquidators; therefore no fee is required to be paid by a liquidator for applications made to the Regional Director under sections 496(1)(a) and 551, and past administrative decisions to the contrary need not be reopened.

Right of inspection: corporate partners must provide partner firm books to inspecting officers under partnership inspection rights.
An inspecting officer may access books and papers of a firm in which the company is a partner because the company, as partner, acquires the partner's right to inspect and copy the firm's books; accordingly the company can obtain the firm's accounts and make them available to the inspecting officer under the company inspection regime.

Director surety liability: standing surety for unrelated accused is ultra vires and risks personal liability.
Director standing surety for an outsider not connected with the company's administration is ultra vires the company; furnishing the company's surety in such cases exceeds corporate authority. Directors should not expose themselves or the company to the risk of acting as sureties for unrelated persons, since they may be held personally liable for acting outside the company's authority and in a manner prejudicial to the company's interests.

Directors standing surety warns that furnishing company surety for outsiders risks personal liability and is ultra vires.
A government circular warns that a director furnishing the company's surety for an outsider accused in criminal proceedings is ultra vires and may be prejudicial to the company's interests; directors are instructed not to expose themselves or the company to the risk of standing sureties for accused outsiders because such conduct may attract personal liability for acting outside corporate authority.

Interpretation of 'court' as equivalent to an administrative tribunal, making its orders operate as court orders.
The term court in section 75(1)(c)(ii) should be read harmoniously with the amended section 79, where court is replaced by Company Law Board; accordingly an order of the Company Law Board should be treated as an order of the court for the purposes of section 75(1)(c)(ii).

Exemption under section 620 limited to prospective cases; existing government companies cannot be reconverted to private status.
Several government companies became public companies by operation of the turnover criterion in sub section (1A) of section 43A. Representations for exemption under section 620 were considered; legal advice indicates exemptions can be granted prospectively but cannot be applied retrospectively to reconvert companies already treated as public. The Department of Company Affairs has granted and is considering other exemptions to lessen operational burdens on government companies.

Prescribed fees govern certified copies from official liquidators; applicants must follow applicable rules on stamps and paper.
Applications for certified copies or extracts from official liquidators are governed by the prescribed charges and prescribed fees scheme; where the Companies (Court) Rules do not prescribe fees, the applicable court rules in analogous proceedings control. Each official liquidator must follow the procedural rules of the court to which the office is attached regarding court fee stamps and the requirement to supply copies on non judicial paper.

Applicability of sections 149 and 165: public companies registered under Part IX remain subject to those statutory requirements.
Under section 578(1) all provisions of the Act apply to companies registered under Part IX subject to the exceptions listed in clauses (a)-(g); accordingly, sections 149 and 165 are fully applicable to public companies registered under Part IX and such companies must comply with the duties and governance requirements set out in those sections.

Inspection powers allow officers to obtain records of company joint ventures with non-company bodies under expanded document access.
An inspecting officer may, under the expanded inspection power authorizing access to 'the books of account and other books and papers of every company', require information and documents relating to a company's joint ventures with bodies that are not companies; the earlier phrase confined to 'books of account of every company' was limited to records a company is required to maintain and did not by itself extend to joint venture documents.

Annual return applicability to foreign companies limited where no Indian share capital and all shareholders resident abroad.
The Department's clarified position is that the provisions of section 159 do not apply to a foreign company which does not hold any share capital in India and whose shareholders are non Indian and resident outside India.