14 April 2008
Provisions relating to Books of Accounts under the Companies Act (Section 209)
All books of accounts shall be kept at the registered office of the company. But if they are kept at any other place in India as decided by the Board of Directors, the company shall send a notice in writing ( Form 23AA) to the Registrar of that place, mentioning the full address of the place. Such notice shall be filed within seven days of choosing that place. If a company has a branch office, proper books of accounts related to the branch business must be maintained at that office. But, summarized returns of these books shall be sent by the branch to the registered office every three months. The books of accounts together with the vouchers, invoices and other connected documents or records shall be preserved in good order for a period of 8 years (or the entire period, if the company is less than 8 years old). The books of accounts must be maintained on accrual basis and according to the double-entry system of accounting. The books cannot be maintained on the cash basis. The primary responsibility for making proper books of accounts of a company is that of the managing director or finance manager and all officers and other employees who have been authorised to maintain the books by the Board of Directors. But,if the company has neither a managing director nor manager,then every director of the company shall have the responsibility. If any company or any person who is responsible for maintaining proper books of accounts fails to take the required steps, it is liable to penalty of imprisonment or fine. The Act provides for the inspection of the books of accounts by the Registrar or by any officer authorised by Government to do so. The inspection may be conducted without giving prior notice to the company. It is the duty of the directors or officers of the company to provide all necessary support to the inspection officers in terms of books of accounts, other books, papers of the company and any other matter. Any default in this regard is a punishable offence. Broadly, the inspections are undertaken to serve one or more of the following objectives:-
To ensure compliance of various provisions of the Companies Act, 1956 and also to keep a watch on the performance/efficiency of the companies; To ensure that the company has not falsified its books of accounts or the company’s funds have not been misappropriated or the management has not misused its fiduciary position for any personal advantage; To see whether any unfair practices prejudicial to the public interest are being resorted to by any company; To examine whether the companies are managed on sound business principles or whether there are acts of mismanagement which may ultimately affect the interests of shareholders, creditors, employees, consumers and the general public; and To see whether statutory auditors have carried out their duties properly while certifying true and fair view of the State of affairs of the company
14 April 2008
(1) Register of members commencing from the date of the registration of the company ... Permanent. (2) Register of debenture-holders ... 15 years after the redemption of debentures (3) Index of members ... Permanent. (4) Index of debenture-holders ... 15 years after the redemption of debentures. (5) Copies of all annual returns prepared under sections 159 and 160 and copies of all certificates and documents required to be annexed thereto under section 160 and 161 ... 8 years from the date of filing with the Registrar.
15 April 2008
At present, Section 209 (4A) of the Act requires companies to preserve the books of accounts, together with the vouchers relevant to any entry in such books of account, in good order, relating to a period of not less than 8 years immediately preceding the current year. The JJ Irani Committee felt that the rules may provide for preservation of books of account and records of the company for a period of 7 years to bring it in harmony with Income Tax Act, which requires 6 years preservation period.
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