Depreciation accounting: absence of tax allowance does not excuse charging depreciation; omission undermines true and fair view.
The Department advises that absence of a depreciation allowance under the Income tax Act does not excuse a company from providing depreciation for Companies Act purposes; a prior Circular offers full clarification. Availability of a consolidated allowance under tax law limits practical conflicts. Omission of appropriate depreciation in the books would undermine the balance sheet's true and fair view.

Prospectus advertisement standards: limited essential disclosures prescribed to prompt investors to obtain the full prospectus, with liability risk.
The Government prescribed a concise proforma for newspaper announcements that restricts press disclosure to essential facts to induce investors to obtain the full prospectus; companies may follow the proforma voluntarily but will incur statutory penalties and compensation liability if announcements contravene applicable law. The proforma specifies items to disclose: company name and registered office, activities, industry location, board and management, capital details and proposed issue terms, subscription opening and closing dates, and sources for application forms and prospectuses.

Advertisement-as-prospectus: prospectus provisions apply to deposit advertisements, subject to specific deposit rules and liabilities extend accordingly.
Advertisements inviting or accepting public deposits are treated as prospectuses and, generally, prospectus provisions apply to them. However, the qualifier "so far as may be" means that where specific requirements are prescribed by the Acceptance of Deposits Rules or deposit-specific provisions, those requirements govern and displace corresponding prospectus provisions (for example, prescribed form requirements override general prospectus disclosure schedules). Civil and criminal liabilities for misstatements and penalties for fraudulent inducement apply to deposit advertisements mutatis mutandis unless superseded by specific deposit rules.

Depreciation compliance: companies must provide statutory depreciation regardless of tax admissibility, or risk defective accounts and penalties.
For determining depreciation to be provided for corporate distributable profits, companies must make the required depreciation provision irrespective of whether the Income tax Act admits a depreciation allowance; only the depreciation rates in the Income tax Rules are relevant, and omission to provide such depreciation will prevent accounts from presenting a true and fair view and may attract penalties on company officers.

Public offer size disclosure must exclude shares reserved on firm allotment to prevent misleading investors.
Inclusion of shares reserved on a firm allotment basis in the number of shares stated as offered to the public risks confusing or misleading investors; companies must exclude such reserved shares when calculating and disclosing the public offer size, because mere revision after prior announcements may not remedy the misinformation and would impose additional corrective publicity and reissue costs.

Auditors' report requirement: Registrar cannot demand separate auditors' report for private company profit and loss.
A private company need not file a separate auditors' report for its profit and loss account; the Registrar must not demand a distinct report. The company may either attach to the profit and loss account an authenticated copy of the full auditors' report as attached to the balance sheet, or attach balance-sheet relevant extracts to the balance sheet and the full authenticated auditors' report to the profit and loss account, with authentication required under the stated provision.

Office of profit restrictions bar managing directors and immediate family from holding selling agent interests without government approval.
Sanction for appointment or reappointment of managing or whole time directors or managers is to be conditional: they shall not, directly or through their wife and son or sons, augment their income from the company by association with selling agents; if approval is granted before selling arrangements are finalised, any subsequent appointment of a selling agent must not give the managing or whole time director or his wife, son or sons a direct or indirect interest without specific Central Government approval. Restrictions may be extended to other relatives if required.

Inter corporate investment limits require prior company and Government approval for excess holdings and specified application particulars.
Prior approval of the investing company and the Central Government is required before making inter corporate investments exceeding prescribed limits; ex post facto approval is not given and unauthorized investments attract penalties. Investments that will create a subsidiary require prior Government consent. Aggregate calculations must include holdings in subsidiaries; the investing company's limits are measured by actual cost, while investee company limits use nominal share value. The board's investment power is non delegable. Historic investments and conversions from private to public are not retrospectively invalidated but count toward aggregates. Applications must name specific investees and use the prescribed form and fee.

Deemed conversion of private companies under company law compels application of public company governance and remuneration compliance.
Deemed conversion under section 43A brings private companies within the substantive obligations applicable to public companies from the effective date, with specified exceptions (member threshold and section 44 filing). Managerial appointment and remuneration provisions (sections 198, 269, 309, 310, 311) apply immediately, though a pre existing officeholder is exempt from section 269(1) for a limited transitional period. Nominee holdings are not treated as beneficial holdings for section 43A, and shareholding reorganisations and Central Government approvals may be required to regularise managerial remuneration and company status.

Prospectus advertisement rules: newspapers must carry a bare proforma announcement directing investors to obtain the full prospectus.
Section 56 mandates that every prospectus disclose specified matters and reports, and Section 66 allows narrow omissions for newspaper advertisements; publishing extracts or abridged prospectuses in newspapers contravenes full-disclosure requirements, creates statutory and civil liability risks, and may mislead investors. The Department therefore proposes a prescribed proforma announcement-a bare newspaper notice directing investors to obtain the full prospectus from brokers, bankers or the company's registered office-and requires such announcements to be published sufficiently in advance of the subscription opening to allow investors to procure and consider the complete prospectus.

Annexing resolutions to articles remains required even before government approval, unless no copy of articles is issued thereafter.
Section 192 requires filing a copy of each specified resolution with the Registrar within the prescribed period and annexing or embodying such resolution to any copy of the articles issued after the resolution is passed. Both duties apply irrespective of whether the resolution is acted upon or government approval is sought or obtained. However, annexation or embodiment need not occur until the company has received clearance to the proposal, provided the company does not issue any copy of the articles subsequent to the passing of the resolution.

Nominated director consent not required to be filed with company when consent already filed with Registrar.
Nominated directors appointed by the Government need not file a separate written consent with the company where the individual has already given consent to the Registrar pursuant to the statutory consent requirement; the Registrar filing is the operative consent record and a duplicate company level filing is unnecessary.

Books of account location: companies must file notice for out of office books; registrars advised not to charge delay fees.
Companies keeping any books of account at a place other than the registered office must file the prescribed notice in Form No. 23A with the Registrar of Companies and pay the usual filing fee; registrars are directed not to charge additional fees for delay in filing such notices.

Political contributions as outgoings: deductible only when made for commercial expediency under illustrative statutory language.
Contributions by a company to a political party or for a political purpose constitute outgoings for computation under clause (j) of sub section (4) only when made for commercial expediency; the illustrative phrase "outgoings inclusive of..." is not exhaustive, so lack of a specific reference to the enabling provision does not prevent such treatment.

Filing requirement for board's report: report must be filed with registrar as attached to balance sheet.
The board's report is a document required to be attached to the balance sheet and, therefore, copies of the board's report must be filed with the Registrar together with the balance sheet and profit and loss account; a separate provision distinguishing annexed documents does not affect this filing obligation.

Depreciation calculation: apply notional written down value and income-tax rates for managerial remuneration computation consistently.
Depreciation for computing net profits for managerial remuneration must be calculated by reference to a notional written down value: for the first post amendment financial year derive that notional value from the book written down value as of April 1, 1956 (or immediately thereafter) after deducting normal pre amendment depreciation (excluding extra and multiple shift allowances for periods ending on or before December 27, 1960); thereafter apply income tax rates (including extra and multiple shift allowances for post commencement periods) to the notional written down value and reduce that value annually by the depreciation so computed.

Depreciation requirement before dividend: companies must provide statutory depreciation and use consistent methods before declaring dividends.
Amendment requires companies to provide minimum depreciation before declaring dividends; prior depreciation already charged must be deducted so only the written down value is further depreciated. The term "original cost" is used to determine the specified period and annual instalment under the straight line method. Immovable properties held as investments are fixed assets and must be depreciated using income tax rule rates. Companies may continue using the straight line method or adopt different methods for different asset classes if applied consistently; depreciation arises with efflux of time and must be provided even for unused assets.

Alternate director obligations: consent, qualification and register duties apply; appointment restrictions generally not, but file qualification declaration if articles require.
Alternate directors must comply with consent to act, share qualification and register-of-directors obligations as for substantive directors; the statutory restriction on appointment/re appointment does not normally apply to alternates, but where the articles require a specified share qualification the alternate must file a declaration of that qualification with the Registrar within two months of appointment.

Model balance sheet format: government approved alternative presentation allowed with prescriptive disclosure and valuation requirements.
The circular supplies a comprehensive model columnar balance sheet for companies seeking Central Government approval to adopt an alternative form to Schedule VI, specifying required classifications and disclosures for share capital, reserves, fixed assets, investments, current assets, loans and advances, borrowings, liabilities, provisions and contingent items, together with valuation, depreciation, revaluation and annexure requirements and particular disclosures concerning related parties and subsidiaries.

Preservation of vouchers and invoices: supporting records must be retained with books of account to substantiate entries.
Companies must preserve the statutory books of account specified in sub section (1) and, in addition, maintain vouchers, invoices and bills for a like period because the relevant entries in the books cannot be substantiated without the supporting documents.