Compliance related to Keeping Books of Accounts Under Companies Act, 2013 By CS Annu Sharma


Dear Professionals,

Smiles for all smilesmilesmile

In most of the cases, directors of the company are in the view that the Books of Accounts are to be kept at the registered office of the company since mostly a promoter of start-ups Incorporate a Company using its own residential address as a Registered Office address and then start a business on rented premises. This helps them in maintaining the same address while changing the place of business depending on the need and cash outflow. Here in this Write Up we are supposed to understand the place where books of Accounts can be kept and for how long period it should be kept in a prominent manner.

It is one of such provision which many companies might end up non-complying without actually realizing it. In previous law under section 209(a) of Companies Act 1956, the same relaxation had been given to keep the books at a place other than the registered office of the company and the companies were required to file E-Form 23AA for the same.

WHAT ARE BOOKS OF ACCOUNT?

As defined in Section 2(13) BOOKS OF ACCOUNTS includes records maintained in respect of—

(i) all sums of money received and expended by a company and matters in relation to which the receipts and expenditure take place;

(ii) all sales and purchases of goods and services by the company;

(iii) the assets and liabilities of the company; and

(iv) 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

 
NOW GET SOME IN DEPTH WHAT SECTION 128 OF COMPANIES ACT, 2013 DESCRIBE:

Section 128 of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 makes it clear that a Company shall keep books of accounts, relevant books and papers and financial statements at its registered office only. However the proviso to Section 128 provides that all or any of the books of account aforesaid and other relevant papers may be kept at such other place in India as the Board of Directors may decide and where such a decision is taken, the company shall, within seven days thereof, file with the Registrar a notice in writing giving the full address of that other place.  

This means that a Company can keep its Books of Accounts at any place in India. However, intimation in form AOC-5 is mandatory within 7 days of the passing of Board Resolution along with a copy of such board resolution. The form does not require professional certification and proof of such address is not mandatory to be provided in the form.
 
WHO IS RESPONSIBLE TO MAINTAIN BOOKS OF ACCOUNTS?

The person responsible to take all reasonable steps to secure compliance by the company with the requirement of maintenance of books of accounts etc. shall be:

i) Managing Director,

ii) Whole-Time Director, in charge of finance

iii) Chief Financial Officer

iv) Any other person of a company charged by the Board with the duty of complying with provisions of section 128.

 
SUMMARIZED POINTS FROM SECTION 128

As per Section 128 of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 as amended from time to time:
  • A company shall keep books of accounts, relevant books and papers and financial statements at its registered office only.
  • Books must be kept on accrual basis and according to double entry system of accounting It can be in hard copy or electronic mode In case of records in electronic mode, the company shall intimate name of service provider, it’s IP address & location, address (if on cloud) to ROC on an annual basis at the time of filing of financial statement.
  • Any or all such accounting records may also be kept at any other place in India as decided by the Board of Directors. However, in such case e-Form AOC-5 must be filed mentioning the full address of place within 7 days of the passing of Board resolution.
  • In case of Branches (in or outside India), books can be kept at branch office only provided summarized returns are sent to the registered office at regular intervals (On a quarterly basis in case of Foreign Branches based outside India) Books along with vouchers must be kept in good order for (EIGHT)  8 years immediately preceding the relevant year.
  • Books of accounts may be kept for longer than 8 years where inspection has been ordered in respect of company under Chapter XIV as per Central Govt.
  • The proviso of Section 128 says “Provided that all or Any of The Books of account aforesaid”. So, in my opinion, the company may carry only a part of the books which are of regular use to a place other than the registered office of the company and may leave the books of previous years or which are not mostly required on regular basis, at the registered office of the company.
  • In case of a company incorporated less than eight years before the financial year, the books of accounts for the entire period proceeding the financial year together with the vouchers shall be so preserved. The provisions of the Income Tax Act shall also be complied with in this regard.

FILING AND FEE OF E-FORM AOC-5

S.NO.

PARTICULARS

1.

E-form AOC-5 required basic information about the company like CIN, Name, Registered Office and Email.

2.

Date of board resolution wherein a decision regarding address at which books of account are to be maintained has been taken.

3.

Details pertaining to the police station under whose jurisdiction the place of the address at which the books of accounts are to be maintained falls.

4.

Address at which the books of account are to be maintained.

5.

The Place of keeping books of Accounts can only be in India.

6.

Mode of form is STP- straight through the process and no professional certification is required.

 
FEES APPLICABLE:

The ROC fee of the form is dependent on the Authorized Capital of the Company.

This shall be as under:

Nominal Share Capital (INR)

Fee applicable

Less than 1,00,000

Rupees 200

1,00,000 to 4,99,999

Rupees 300

5,00,000 to 24,99,999

Rupees 400

25,00,000 to 99,99,999

Rupees 500

1,00,00,000 or more

Rupees 600

 
STEPS FOR INTIMATION TO ROC

S. NO.

PARTICULARS

1.

Give notice to Directors along with the agenda and notes on agenda to convene the Board Meeting at least seven days before the date of the meeting in compliance with the Secretarial Standards I.

2.

Convene the Board Meeting to decide upon the place where the books of accounts and other relevant books and papers and financial statement are required to be kept and pass the resolution approving the same.

3.

File e-Form AOC-5 along with the certified true copy of the board resolution as an attachment within 7 days from of passing of the board resolution.


PENALTY FOR NON-COMPLIANCE OF ANY PROVISION OF SECTION 128 (REGARDING BOOKS OF ACCOUNTS):

Managing Director, Whole Time Director, CFO and Other responsible people of a company charged by the Board with the duty of complying with the provisions of the section, contravenes such provision, shall be punishable with:

        I.             

A term which may extend to one year;

 II.             

 

or with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees;

    III.             

or with both.

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Write a Comment

  • Dear Annu,

    Your Articles and very informative and innovative.

    It thoroughly throws light on Process and Procdures as well.

    KEEP WRITING

    Thanks and Regards,

    Shubham Phule

    07-05-2019 / 02:01:08 PM
    Reply