Capital redemption reserve as free reserve permits its recognition under rule 2(d) of Companies (Acceptance of Deposits) Rules.
A circular dated 29 12 1976 clarifies that the Capital Redemption Reserve is to be treated as a free reserve for the purpose of rule 2(d) of the Companies (Acceptance of Deposits) Rules, 1975, allowing its inclusion when determining available free reserves for acceptance of public deposits.

Capital Redemption Reserve treated as free reserve, permitting its use where rule 2(d) allows under companies law guidance.
A Companies Law circular dated 29 12 1976 declares that the Capital Redemption Reserve is to be treated as a free reserve for the purpose of rule 2(d), classifying it with other reserves that qualify as free reserves and aligning its regulatory treatment and permissible uses accordingly.

Disclosure of penal proceedings: revised application forms require convictions and pending penal proceedings to be disclosed for appointments.
The Department narrows the disclosure requirement in Forms 25A and 25C: applicants must disclose any penalty imposed on, or conviction undergone by, the person under the specified Acts during the last eight years, and any pending proceedings concerning violations that attract the penal provisions of those Acts, thereby addressing concerns that the term "proceedings" was vague and overly broad.

Provision for proposed dividend required in accounts; non compliance attracts directors' and auditors' statutory liability.
Companies must provide for proposed dividend in the profit and loss account and show that provision under Current liabilities and provisions in the balance sheet. This obligation flows from Schedule VI disclosure requirements, dividend and reserves rules, and the accounting provision cited, and failure to comply constitutes a contravention of statutory accounts disclosure obligations that undermines the true and fair view of the accounts and attracts penal consequences for directors and officers; auditors must report such contraventions or face regulatory action.

Treatment of secured loan repayments now treated as deposits, repayment governed by statutory deposit repayment rules.
Repayment of loans secured by mortgage of assets is governed by the statutory repayment regime for deposits because such amounts were deposits within the meaning of the Directions even if accepted beyond prescribed limits, and acceptance under the Directions constituted acceptance of deposits.

Deposit classification governs repayment under Section 58A(3)(a) for loans secured by mortgage now treated as deposits.
Amounts accepted under the first proviso to sub para (2) of para 3 of the earlier Directions were deposits within the applicable definition despite being permitted beyond prescribed limits; acceptance therefore constituted acceptance of deposits under those Directions, and repayment of loans secured by mortgage that fell within that proviso is governed by the statutory repayment provision applicable to deposits.

Unpaid dividend treatment for non resident shareholders remains subject to statutory transfer rules while RBI approval enables payment from unpaid accounts.
The circular clarifies that the statutory regime governing unpaid dividend applies to amounts payable to non resident shareholders even when Reserve Bank approval is required; companies, after obtaining such approval, may draw from unpaid dividend accounts to pay non resident shareholders, and only after the statutory limitation period expires must amounts be transferred to the general revenue account of the Central Government.

Board approval of annual accounts required before submission to statutory auditors; approval cannot be delegated to committees.
The board of directors must consider and approve the company's annual accounts before those accounts are handed to the statutory auditors; in the absence of an express statutory delegation, this approval cannot be delegated to a committee or some directors, and any modified accounts must be approved by the board prior to submission for audit.

Deposits classification: director and shareholder contributions excluded from statutory deposit limits under companies acceptance rules.
Amounts received by a private company from its directors and shareholders fall outside the definition of deposits under rule 2(b)(ix) and are not subject to the limits specified in rule 3, so a private company accepting funds only from its directors and shareholders need not treat those receipts as deposits for compliance with the rule 3 ceiling.

Partnership investment disclosure requires partners' net credits shown as investments and profit shares disclosed to shareholders.
Net amounts standing to partners' credit-whether fixed capital accounts or merged partner accounts-must be shown under Investments and not under Current Assets, Loans and Advances. The firm's total capital should be disclosed preferably as at the company's balance-sheet date or, where capital fluctuates and accounting dates differ, as per the firm's last authenticated balance-sheet. "Share of each partner" is to be disclosed as the partner's share in the profits of the firm rather than share in capital.

Disclosure requirements: separate reporting of imports and foreign currency expenditures in profit and loss, with basis and gross/net treatment stated.
Profit and loss account disclosures must classify turnover and quantify by classes of goods tied to industrial licences or official import classifications, resorting to MRTPC rules or broad headings where necessary. Shared amenity costs need not be apportioned; other employee remuneration and perquisites must be disclosed and significant expenditure items shown separately. Para 4D requires disclosure of imports on a c.i.f. basis (with acceptable conversion from f.o.b.), itemised foreign currency expenditures by category with basis and gross/net treatment footnoted, reporting of imported materials consumed, and separate reporting of foreign exchange earnings with basis stated.

Further allotment within issued capital does not increase subscribed capital; Section 81(1) inapplicable, sale of forfeited shares excluded.
Further allotment of shares from the unsubscribed portion of issued capital does not increase the subscribed capital and is treated as the first allotment for those shares, so the statutory pre emptive rights governing new issues are not applicable to such remaining issued shares. The statutory provision is also inapplicable to the sale of forfeited shares because no new allotment is necessary for their sale.

Last employment held clarified: disclose the post and period of the employee's immediately prior employment in board reports.
The term "last employment held by such employee before joining the company" means the post most recently held by the employee in any other company or organisation. The board's report should indicate particulars of that last employment, specifically the designation of the post and the period during which it was held.

Beneficial interest in shares clarified: declaration rules do not apply to banks holding exchange deposited shares as security.
Where banks keep shares lodged by stock exchanges as security deposits pursuant to a notification under the Securities Contract (Regulation) Act, the provisions of the declaration section and the related rules concerning beneficial interest in shares do not apply to those banks.

Transfer of unpaid dividend principle: timely posting of the dividend warrant prevents transfer despite later non encashment.
The Department clarifies that the expressions "has not been paid" and "warrant in respect thereof has not been posted" denote separate contingencies; therefore, where a company has posted the dividend warrant within the prescribed posting period, the transfer provision does not apply merely because the warrant was not encashed within the subsequent presentation period.

Exemption under sub section (6) of section 43A applies to companies converted to public status; restoration of private designation advised.
The exemption under sub section (6) of section 43A applies to companies becoming public under the conversion provisions; the earlier contrary circular is withdrawn. Companies that deleted "Private" from their registered name and altered their certificate of incorporation and memorandum are advised to apply to the Registrar to restore "Private" and cancel those alterations.

Signing of board minutes: chairman or next chairman may sign; minutes must be written within thirty days.
Either the chairman of the meeting or the chairman of the next succeeding meeting may initial or sign every page and date and sign the last page of the record of proceedings; minutes must be written within thirty days of the meeting, but the signature may be given by the chairman of the next meeting if that meeting is held within the permissible three month interval, so signatures need not be insisted upon within thirty days though preparation of minutes must be.

Auditor independence: a company's statutory auditor cannot serve as its internal auditor due to conflict with objective reporting.
The internal auditor is appointed by management and functions in an employee-like capacity, while the statutory auditor is appointed to perform independent reporting obligations and must assess internal control procedures and the existence of an internal audit system; if the same person served as both, they could not provide the independent and objective report required, and therefore a statutory auditor cannot also be the company's internal auditor.

Officer status arises where an employee has financial control; such classification triggers statutory disclosure duties.
Employees vested with powers of financial control over one or more operational fields are to be treated as Officer under clause (30) and section 2(30). Such classification applies to roles like chief accountant, works manager, sales manager, purchase manager and estate manager, making them subject to Part I of Schedule VI disclosure obligations concerning debts, loans or advances.

Voluntary winding up: official liquidator may verify records, report on affairs, and order further investigation where prejudicial conduct appears.
When a voluntary liquidator cannot produce books of account, the official liquidator must verify available records, use Registrar files and complaints to form a factual report to the court, and may incur expenses from general grants to transport or obtain books for scrutiny; a report indicating prejudicial conduct is a prima facie finding permitting the court to direct a further investigation by the official liquidator.