Query

why Shareholders are not allowed to inspect books of a/c U/S 209A?

Replies (1)

WHY? is a difficult question to answer. 

In my opinion the main reason for it can be confidentiality of books.  Books of a/c contains sensitive informations which if leaked out to competitors can cause harm to the company and its not possible to trace or keep check on thousands of shareholders.  Hence there is no statutory right to member to inspect books of a/c. 

 

Still Co. Law has other provisions which can help shareholder to view books in deserving cases.  The first one is that a company itself can insert a clause in its Article Of Association to grant right to shareholders to inspect the books (such right may be conditional or restricted as per Company's choice).

Besides this shareholders can also apply to court to allow them to view the books of accounts if there is a case of misappropriation of funds or fraud.  For a petition u/s 397/398 (oppression/mismanagement) shareholders can view books of a/c.

Similarly in case of Sec. 25 companies, members are allowed to inspect books of a/c.

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