CS D Hem Senthil Raj
Introduction – As per Section 128 of the Companies Act, 2013, Every company shall prepare and keep at its registered office books of account and other relevant books and papers and financial statement for every financial year which give a true and fair view of the state of the affairs of the company, including that of its branch office or offices, if any, and explain the transactions effected both at the registered office and its branches and such books shall be kept on accrual basis and according to the double entry system of accounting.
Books of Accounts include the following:
1. Records maintained in respect of all sums of money received and expended by a company and matters in relation to which the receipts and expenditure take place.
2. Records maintained in respect of all sales and purchases of goods and services by the company.
3. Records maintained in respect of the assets and liabilities of the company.
4. Records maintained in respect of the items of cost as may be prescribed under section 148 in the case of a company which belongs to any class of companies specified under that section.
Books of accounts also include the Cost Records maintained by the Company.
Relevant books and papers include the following:
Books of account, deeds, vouchers, writings, documents, minutes and registers maintained on paper or in electronic form.
Branch Office includes the following:
Any establishment described as Branch Office by the company.
In case of Foreign Company:
It is required to keep at its principal place of business in India, the books of account, with respect to monies received and spent, sales and purchases made, and assets and liabilities, in the course of or in relation to its business in India.
ALTERNATIVES AVAILABLE FOR THE COMPANY
Option – 1
A Company can keep all its books of account and other relevant books and papers and financial statement for every financial year including its branch office or offices at the registered office of the Company.
Option – 2
A Company can keep all its books of account and other relevant books and papers and financial statement for every financial year including its branch office or offices at such other place in India as the Board of Directors may decide.
PROCEDURAL ASPECTS INVOLVED FOR KEEPING BOOKS OF ACCOUNTS IN A PLACE OTHER THAN THE REGISTERED OFFICE OF THE COMPANY
The Following are the procedure involved in keeping books of account and other relevant books and papers and financial statement for every financial year including its branch office or offices in the place other than the Registered Office of the Company:
To Obtain Board Consent either through Physical Board Meeting or Board Meeting through video conferencing or through circular resolution.
To file notice with Registrar of Companies in E-form AOC – 5 within seven days from the date of decision taken by Board by specifying the full address of the place where the books of accounts, records etc are to be kept including the details pertaining to police station under whose jurisdiction the place of the address at which the books of account are to be maintained falls.
A company having a branch office in India or outside India can keep their book of accounts, records etc relating to the transactions effected at the branch office at that office and proper summarised returns shall be periodically sent by the branch office to the company to its registered office or other place where the books of accounts or records are kept.
Period of Keeping Books of Accounts:
Books of account of the company relating to a period of not less than eight financial years immediately preceding a financial year, or where the company had been in existence for a period less than eight years, in respect of all the preceding years together with the vouchers relevant to any entry in such books of account shall be kept in good order.
However, in case of any investigation has been ordered in respect of the company under Chapter XIV, the Central Government may direct that the books of account may be kept for such longer period as it may deem fit.
Penalty For Non – Compliance:
Managing director, the whole-time director in charge of finance, the Chief Financial Officer, person of a company charged by the Board shall be
Punishable with a imprisonment for a term which may extend to one year or with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees or with both.
FREQUENTLY ASKED QUESTIONS
1. Whether the Minutes, Statutory Registers and Records of the Company are required to be maintained for more than 8 (Eight) Years?
As per sub section 5 of section 128 of the Companies Act, 2013, the books of accounts of every company relating to a period of not less than 8 (Eight) financial years immediately preceding a financial year shall be maintained.
However with regard to minutes and statutory registers and records it shall be maintained by the company since inception. Since minutes and statutory records are the principal documents of the company that needs to be maintained and preserved.
2. Can a Company keep its part of Books of Accounts and other papers in some other place in India other than the registered office of the Company?
Yes, The Company has the option to prepare, preserve and maintain the Books of Accounts and other papers in any place in India other than the Registered Office of the Company after obtaining the Board’s Approval. Provided the Board Resolution shall clearly specify that such part of the books and papers shall be kept at those places respectively.
3. Can a Company keep its Books of Accounts and other papers in multiple places in India?
Yes, there is no such restriction under the provisions of Section 128 of CA, 2013 and rules framed thereunder, for keeping the Books of Accounts and other papers in multiple places in India.
However the Board Resolution shall clearly specify that such part of the books and papers shall be kept at those places respectively.
REAL TIME CASE STUDY
1. What would be the remedy available for a listed company, when a shareholder of the company walks in to the registered office of the company for inspection of statutory registers and records, when the company had kept its books and papers in any other place other than the registered office?
As per the provisions of section 170 of the CA, 2013, every shareholder of the company has the right to inspect the statutory registers and records of the company during the business hours and is entitled to take extracts there from and copies thereof of the registers.
In such a case where the shareholder has visited the registered office of the company where the records are kept at such place other than registered office, the company shall explain the shareholder that the registers and records are being maintained in such place other than the registered office and shall guide the shareholder to go to such place and inspect the registers and records.