Tapuriah Jain & Associates

Place Of Keeping Of Financial And Statutory Records Books Of Accounts For Companies Under Companies Act, 2013

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.

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:

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:

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.

Time Period:

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:

If the 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, contravenes such provisions, such managing director, whole-time director in charge of finance, Chief Financial officer or such other person of the company shall be punishable with 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.

Resolution:

Specimen Board Resolution For Keeping And Maintaining Books Of Accounts At A Place Other Than The Registered Office “RESOLVED THAT pursuant to the proviso to Section 128(1) of the Companies Act, 2013, the books of accounts of the company be kept and maintained at the company’s head office at …………….. .. with effect from ………………… .. and that Mr. ………………. …, secretary of the company, be and is hereby authorised to file electronically E-Form No MGT – 14 with the Registrar of Companies …………… … at ………………… .. by affixing his digital signature thereon and with the requisite filing fees within the prescribed time of seven days hereof and to take all necessary actions in this respect.”