E Governance : Well promoted in Companies Act 2013

COMPANIES ACT,2013: PROMOTING E-GOVERNANCE

                     K.V.Lakshmi, Company Secretary, Chennai 

The Companies Act,2013 has widely accepted E-Governance. Through out the Act, E-Governance has been proposed for various processes like maintenance of records, inspection of documents in electronic form, option of keeping of books of accounts in electronic mode, financial statements to be placed on company's website, holding of board meetings through video conferencing/other electronic mode; voting through electronic means.

In this section, we shall focus our attention to the below mentioned two topics:-

Ø  Keeping of books of accounts in electronic form

Ø  Holding of board meetings through video conferencing/other electronic mode

KEEPING OF BOOKS OF ACCOUNTS IN ELECTRONIC FORM:-

Section 128 of the Act provides that every company shall prepare and keep at its registered office, books of account and other relevant books for every financial year, including that of its branch office or offices and explain the transactions effected both at the registered office and its branches. Such books shall be kept on accrual basis and according to the double entry system of accounting.

If the books of account aforesaid and other relevant papers are to be kept at any other place in India as decided by the Board, then, the company shall, within seven days file with the Registrar a notice in writing giving the full address of that other place.

Further, it has also been provided that the company may keep such books of account or other relevant papers in electronic mode in such manner as may be prescribed.

Requirements for Companies having a branch office in India or outside India:-

Where a company has a branch office in India or outside India, the Companies shall be deemed to have complied with the above provisions, if proper books of account relating to the transactions effected at the branch office are kept at that office; the branch office must send proper summarized returns periodically to the company at its registered office or the other place as referred to above.

Inspection of Books of Account by Director:-

For the first time, the law talks about Inspection of books of accounts by a Director. 

The books of account and other books maintained by the company within India shall be open for inspection at 

* the registered office of the company or 

* at such other place in India by any director 

during business hours, 

and in the case of financial information, if any, maintained outside the country, copies of such financial information shall be maintained and produced for inspection by any director. 

The inspection in respect of any subsidiary of the company shall be done only by the person authorized in this behalf by a resolution of the Board of Directors.

Period of keeping of Books of Account:-

The books of account of every company shall be kept for a period of not less than eight financial years immediately preceding a financial year, or where the company has 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 . The books shall be kept in good order.

However, where an 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.

Consequences of Non-Compliance of Section 128:-

Persons Charged:

Managing director, the whole-time director in charge of finance, the Chief Financial Officer or any other person of a company charged by the Board with the duty of complying with the provisions of this section.

Penalty:

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.

HOLDING OF BOARD MEETINGS THROUGH VIDEO CONFERENCING/OTHER ELECTRONIC MODE:-

·         Notice of the Board Meeting shall be circulated to all the Directors and the Notice shall clearly mention that the directors can participate through the electronic mode (i.e. audio-visual electronic communication facility, Tele conferencing or Audio Conferencing) and shall give the information about the access of such facility.

 ·         The director to intimate in writing to the Chairperson/CS regarding his intention to participate through video conferencing, atleast 3 days in advance. In the absence of any confirmation from the director, it will be presumed that he will attend the board meeting physically.

 ·         Venue specified in the Notice shall be taken as the place of the Board Meeting and all recordings shall be made at that place.

 ·         At start of the board meeting through electronic mode, all the Directors to state on record:Name of Director,Location of Director,•Confirmation regarding clarity in seeing/hearing other participants,Confirmation regarding receipt of agenda and that no one other than he himeself is attending or having access to the proceedings of the meeting.

·         The Directors attending through Video Conferencing/other Electronic Mode will be counted for the purpose of quorum.

 ·         The Chairman has to make a Roll Call at the beginning, end and after every break of the meeting. He shall even record the votes in case any motion is objected to.

 ·         The Chairman shall confirm the participation of the directors in the meeting. After 

the roll call, the chairman shall certify the existence of the quorum.

 ·         The Chairman can commence the proceeding after ascertaining the quorum.

 ·        The statutory registers which are required to be placed in the Board meeting shall be placed before the Chairman for compliance of the Act. With reference to the signing requirements of statutory registers, it shall be deemed to have been signed by directors participating through electronic mode if they have given their consent to this effect in that meeting.

·         At the close of the meeting, the Chairman shall announce the summary of the decisions taken in that meeting in respect to the agenda item and names of the directors in favor and not in favor with it.

 ·         A roll call shall be made at the conclusion of the meeting as specified above and video recording of this specific part of the meeting shall be preserved .

 ·         Draft minutes of the meeting shall be circulated in writing or in electronic mode within 7 days of the meeting for comments / confirmation to the directors who attended the meeting to dispel all doubts on matters taken up during the meeting. The minutes shall also disclose the particulars of the Directors who attended the meeting through electronic mode. Thereafter, the minutes shall be entered in the minute books.

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