PLACE OF KEEPING BOOKS
OF ACCOUNT, OTHER RELEVANT BOOKS & PAPERS AND FINANCIAL STATEMENT
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
ü 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.
ü Records
maintained in respect of all sales and purchases of goods and services by the
company.
ü Records
maintained in respect of the assets and liabilities of the company.
ü 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.
Note:
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
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 office.
Option – 1
At the registered office of the Company.
Option – 2
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:
Step: 1
To Obtain Board Consent either through Physical
Board Meeting or Board Meeting through video conferencing or through circular
resolution.
Step: 2
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.
Note:
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.
Comparison
of Provisions in Companies Act, 1956 and 2013:
|
Particulars
|
Section
163 of Companies Act, 1956
|
Section
128 of Companies Act, 2013
|
|
Register
and Returns – Place of Keeping
|
Within
the city, town or village in which the registered is situated by passing a Special Resolution in General Meeting.
|
At any
place in India by Boards Approval.
|
|
Books of
Accounts – Place of Keeping
|
At any
place in India by Boards approval.
|
At any
place in India by Boards Approval.
|
FLAWS
IN COMPANIES ACT, 2013
Under the New Companies Act, 2013, the Corporate are
provided with the freedom of fixing the place at which the Books of accounts,
records, registers of the Company to be kept at any place in India without obtaining
any prior approval from the shareholders of the Company and we feel that it
shall indirectly effect the interest of the shareholders at large in case of a
Listed entity whose shares are listed in the recognised stock exchange.
Further we feel that it may not be practically
possible for a shareholder to visit the place other than the registered office
of the Company to access the register and records of the Company.
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 the 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
What
would be the remedy available for a listed/limited 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 statutory
registers and records in any other place other than the registered office?
As per
the provisions of section 171 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.
BY
CS K VINOTH
CS D HEM SENTHIL RAJ
