Books of Account and Companies Act, 2013

Books of Ac
count and C
ompanies A
ct, 2013:
A discuss from legal prospective
By- Jayshree choudhary

B.Sc.LLB(Hons)
1
Synopsis
 Definition of books of account
 Place of keeping books of acc
oun
 maintainance of books of acc
ount
 Inspection of books of accoun
t 2
Books of Account
 Definition
 Sec 2(13) of Company Act, 2013 that “boo
ks of account” includes records maintained
in respect of—
 (i) all sums of money received and expend
ed by a company and matters inrelation to
which the receipts and expenditure take pl
ace;
 (ii) all sales and purchases of goods and s
ervices by the company; 3

Books of Account.....cont.
 (iii) the assets and liabilities of the company; a
nd
 (iv) the items of cost as may be prescribed un
der section 148 in the case ofa company which
belongs to any class of companies specified un
der that section;.
4
Key features of su
ch books of acc
 Key featuresount
of such books of a
ccount, books and papers, fina
ncial statements are as under:
 (i) It gives a true and fair view
of the state of the affairs of the
company;
 (ii) It explains the transactions
effected both at the registered
office and its branch(s), if any;5
Key features of su
ch books of acc
ount......cont
(iii) Such books shall be kept on accrual basis
and according to the double entry system of a
ccounting.
6
Place of Keeping Books of Account
Section 128(1) requires every company to prep

are and keep the books of account and other r
elevant books and papers and financial statem
ents at its registered office. However, all or any
of the books of accounts may be kept at such o
ther place in India as the Board of directors ma
y decide. When the Board so decides the comp
any is required within seven days of such decis
ion to file with the Registrar a notice in writing g
iving full address of that other place.
7
Maintenance of Books of
account in electronic for
m
A company can maintain its books
of accounts online or in an electr
onic form subject to the followin
g conditions:
The electronic records must be ac
cessible in India.
Information should retain the for
mat in which it is generated and
8
 Maintenance of Books
of account in electronic for
mInformation provided by branch should not be
altered
Electronic records should be capable of bein
g displayed in legible form
Backup shall be kept in server located in Indi
a
The company should intimate ROC on annua
l basis with relevant information related to the
service provider.
9
Inspection of Book of Accounts
Section 128(3) provides that books of account and

other books and papers shall be open to inspection
by any director during business hours. However ins
pection in respect of the subsidiary company is per
mitted only by a person duly authorized by the Boa
rd of Directors by passing a resolution in this regar
d.
10
DURATION FOR WHICH BOOK IS TO BE PR
ESERVED
Period for which books of account to
be retained Section 128(5) specifies
that the books of account of every c
ompany relating to the period of not
less than eight years immediately p
receding the current year shall be p
reserved in good order along with t
he relevant vouchers. Where a com
pany has not been in existence for e
ight years, the books of account an
11
Persons responsible for keeping proper books
of account [vide sub-section (6) of section
128]
i) Managing Director,
ii) Whole-Time Director, in charge of finance
iii) Chief Financial Officer
iv) Any other person of a company charged b
y the Board with duty of complying with provi
sions of section 128.
12
PENALTY
In case of contravention the person so respo

nsible shall be punishable with imprisonment
or fine or both. The fine which shall not be les
s than rupees fifty thousand and may extend
to rupees five lakhs and imprisonment for a t
erm which may extend to one year or both. T
here is no provision in the Act to prosecute th
e company concerned. Only the functionaries
identified in these sections that alone can be
charged and prosecuted- SaniaySuri v. State
13
Case laws
 LalitaRaiya Lakshmi v. Indian Motor Co. Lt
d .[1962] 32 Comp. Cas. 207.
 A shareholder has no statutory right of ins
pection of the books of account of the co
mpany. He can, however, inspect the book
s only if such right is given specifically thro
ugh the articles, which is rare.
14
Conclusion
 Thus, here I am concluding my research t
hat, As per Section 128(1), Every compan
y, similar to the requirement of the existin
g 1956 Act, is required to maintain books
of accounts at its registered office. ‘Books
of accounts’ are required to show all mone
y received and spent and details thereof, s
ales and purchases of goods, assets and li
abilities and items of cost as may be presc
ribed.
15
Conclusion.....cont
 The books of accounts of a company esse
ntially provide the complete financial infor
mation of a company.

16

Books of Account and Companies Act, 2013

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Books of Account and Companies Act, 2013

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Books of Ac

By- Jayshree choudhary

Section 128(1) requires every company to prep

Section 128(3) provides that books of account and

In case of contravention the person so respo

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