INSPECTION OF RECORDS/REGISTERS UNDER COMPANIES ACT, 2013

[Mr. M. GOVINDARAJAN]

Introduction

Any company registered under the Companies Act, 2013(‘Act’ for short)  is to comply with the various provisions of Act and the rules made there under.  Failure to comply with the provisions will attract penalty to the company as well as officer-in-default.  The Act also requires to maintain registers and records under various section.  These records are shall be open to inspection at free of cost or on payment of such fees as may be prescribed.  Similarly any person can seek for copies of documents from the company and the company is liable to give the same to such person on payment of such fees as may be prescribed. 

Register of charges

Section 81(2) of the Act provides that a register of charges kept in pursuance of this section shall be open to inspection by any person on payment of such fees as may be prescribed for each inspection.

Company's register of charges

Section 85 of the Act provides that every company shall keep at its registered office a register of charges in Form CHG - 7 and in such manner as may be prescribed, which shall include therein all charges and floating charges affecting any property or assets of the company or any of its undertakings, indicating in each case such particulars as may be prescribed.   A copy of the instrument creating the charge shall also be kept at the registered office of the company along with the register of charges.

The register of charges and instrument of charges shall be open for inspection during business hours-

• by any member or creditor without any payment of fees; or
• by any other person on payment of such fees as may be prescribed,

subject to such reasonable restrictions as the company may, by its articles, impose.

Register of Members

Section 88 of the Act provides that every company shall keep and maintain the following registers-

• Register of Members – Form MGT – 01;
• Register of Debenture holders – Form MGT - 02; and
• Register of any other security holders – MGT – 02.

Every such register shall include an index of the names included therein.   A company may, if so authorized by its articles, keep in any country outside India, in such manner as may be prescribed, a part of the register called ‘foreign register’ containing the names and particulars of the members, debenture-holders, other security holders or beneficial owners residing outside India.

The registers and indices maintained pursuant to section 88 and shall be open for inspection during business hours, at such reasonable time on every working day as the board may decide, by any member, debenture holder, other security holder without payment of fee and by any other person on payment of such fee as may be specified in the articles of association of the company but not exceeding ₹ 50/- for each inspection.

Any such member, debenture holder, security holder or any other person may require a copy of any such register or entries therein or return on payment of such fee as may be specified in the articles of association of the company but not exceeding ₹ 10/- for each page. Such copy or entries shall be supplied within 7 days of deposit of such fee.

Register of Significant beneficial owners in a company

Section 90(2) of the Act provides that every company shall maintain a register of the interest declared by individuals and changes therein which shall include the name of individual, his date of birth, address, details of ownership in the company and such other details as may be prescribed.   The company shall maintain a register of significant beneficial owners in Form No. BEN-3.

The register shall be open for inspection during business hours, at such reasonable time of not less than two hours, on every working day as the board may decide, by any member of the company on payment of such fee as may be specified by the company but not exceeding ₹ 50/-  for each inspection.

Annual Return

Section 92 of the Act provides that every company shall prepare a return in MGT - 07 containing the particulars as they stood on the close of the financial year.  Every company shall place a copy of the annual return on the website of the company, if any, and the web-link of such annual return shall be disclosed in the Board's report.

Copies of annual return filed under Section 92 shall be furnished to any member, debenture-holder, other security holder or beneficial owner of the company or any other person on payment of such fee as may be specified in the Articles of Association of the company but not exceeding ₹ 10/- for each page and such copy shall be supplied by the company within a period of 7 days from the date of deposit of fee to the company.

Inspection of registers, returns etc.

Section 94 provides that the registers and their indices, except when they are closed under the provisions of this Act, and the copies of all the returns shall be open for inspection by any member, debenture-holder, other security holder or beneficial owner, during business hours without payment of any fees and by any other person on payment of such fees as may be prescribed.

Any such member, debenture-holder, other security holder or beneficial owner or any other person may-

• take extracts from any register, or index or return without payment of any fee; or
• require a copy of any such register or entries therein or return on payment of such fees as may be prescribed.

Such particulars of the register or index or return as may be prescribed shall not be available for inspection or for taking extracts or copies under this sub-section.

If any inspection or the making of any extract or copy required under this section is refused, the company and every officer of the company who is in default shall be liable, for each such default, to a penalty of ₹ 1000/- for every day subject to a maximum of ₹ 1 lakh during which the refusal or default continues.

The Central Government may also, by order, direct an immediate inspection of the document, or directs that the extract required shall forthwith be allowed to be taken by the person requiring it.

Statement annexed to notice

Section 102 (1) of the Act provides that a  statement setting out the material facts concerning each item of special business to be transacted at a general meeting, shall be annexed to the notice calling such meeting. 

  Section 102 (3) of the Act provides that where any item of business refers to any document, which is to be considered at the meeting, the time and place where such document can be inspected shall be specified in the statement under sub-section (1).

Inspection of proxies

Section 105 of the Act provides that every member entitled to vote at a meeting of the company, or on any resolution to be moved thereat, shall be entitled during the period beginning twenty-four hours before the time fixed for the commencement of the meeting and ending with the conclusion of the meeting, to inspect the proxies lodged, at any time during the business hours of the company, provided not less than three days' notice in writing of the intention so to inspect is given to the company.

 Inspection of minute-books of general meeting

Section 119 of the Act provides that the books containing the minutes of the proceedings of any general meeting of a company or of a resolution passed by postal ballot, shall-

• be kept at the registered office of the company; and
• be open, during business hours, to the inspection by any member without charge, subject to such reasonable restrictions as the company may, by its articles or in general meeting, impose, so, however, that not less than two hours in each business day are allowed for inspection.

Any member shall be entitled to be furnished, within 7 working days after he has made a request in that behalf to the company and on payment of such fees as may be prescribed, with a copy of any minutes.

If any inspection is refused, or if any copy required is not furnished within the time specified therein, the company shall be liable to a penalty of ₹ 25000/- and every officer of the company who is in default shall be liable to a penalty of ₹ 5000/- for each such refusal or default, as the case may be.

In the case of any such refusal or default, the Tribunal may by order, direct an immediate inspection of the minute-books or direct that the copy required shall forthwith be sent to the person requiring it.

A foreign register shall be open to inspection and may be closed, and extracts may be taken there from and copies thereof may be required, in the same manner, mutatis mutandis, as is applicable to the principal register, except that the advertisement before closing the register shall be inserted in at least two newspapers circulating in the place where in the foreign register is kept.

Maintenance and inspection of documents in electronic form

Section 120 of the Act provides that any document, record, register, minutes, etc.,-

• required to be kept by a company; or
• allowed to be inspected or copies to be given to any person by a company under this Act, may be kept or inspected or copies given, as the case may be, in electronic form in such form and manner as may be prescribed.

Rule 29 of Companies (Management and Administration) Rules, 2014 provides that where a company maintains its records in electronic form, any duty imposed by the Act or rules made there under to make those records available for inspection or to provide copies of the whole or a part of those records, shall be construed as a duty to make the records available for inspection in electronic form or to provide copies of those records containing a clear reproduction of the whole or part thereof, as the case may be on payment of not exceeding ₹ 10/- per page.

Books of Account

Section 128 of the Act provides that the books of account and other books and papers maintained by the company within India shall be open for inspection at the registered office of the company or at such other place in India by any director during business hours, and in the case of financial information, if any, maintained outside the country, copies of such financial information shall be maintained and produced for inspection by any director subject to such conditions as may be prescribed.  The inspection in respect of any subsidiary of the company shall be done only by the person authorized in this behalf by a resolution of the Board of Directors.

Where an inspection is made, the officers and other employees of the company shall give to the person making such inspection all assistance in connection with the inspection which the company may reasonably be expected to give.

Audited financial statement

Section 136 of the Act provides that a copy of the financial statements, including consolidated financial statements, if any, auditor's report and every other document required by law to be annexed or attached to the financial statements, which are to be laid before a company in its general meeting, shall be sent to every member of the company, to every trustee for the debenture-holder of any debentures issued by the company, and to all persons other than such member or trustee, being the person so entitled, not less than 21 days before the date of the meeting.      

A listed company shall also place its financial statements including consolidated financial statements, if any, and all other documents required to be attached thereto, on its website, which is maintained by or on behalf of the company.  Every listed company having a subsidiary or subsidiaries shall place separate audited accounts in respect of each of subsidiary on its website, if any.  

A company shall allow every member or trustee of the holder of any debentures issued by the company to inspect the documents at its registered office during business hours.

If any default is made in complying with the provisions of this section, the company shall be liable to a penalty of ₹ 25000/- and every officer of the company who is in default shall be liable to a penalty of ₹ 5000/-.

 Members' right to inspect

Section 171 of the Act provides that the Register of directors and key managerial personnel and their shareholding     shall be open for inspection during business hours and the members shall have a right to take extracts there from and copies thereof, on a request by the members, be provided to them free of cost within 30 days; and shall also be kept open for inspection at every annual general meeting of the company and shall be made accessible to any person attending the meeting.

If any inspection is refused, or if any copy required under that clause is not sent within 30 days from the date of receipt of such request, the Registrar shall on an application made to him order immediate inspection and supply of copies required there under.

Loan and investment by company

Section 186(9) of the Act provides that every company giving loan or giving a guarantee or providing security or making an acquisition under this section shall keep a register which shall contain such particulars and shall be maintained in such manner as may be prescribed.

Section 186(10) provides that the above said register shall be kept at the registered office of the company and -

• shall be open to inspection at such office; and
• extracts may be taken there from by any member, and copies thereof may be furnished to any member of the company on payment of such fees as may be prescribed.

Register of contracts or arrangements in which directors are interested

Section 189 (1) of the Act provides that every company shall keep one or more registers giving separately the particulars of all contracts or arrangements to which sub-section (2) of section 184 or section 188 applies, in such manner and containing such particulars as may be prescribed and after entering the particulars, such register or registers shall be placed before the next meeting of the Board and signed by all the directors present at the meeting.

Section 189 (3) provides that the said register shall be kept at the registered office of the company and it shall be open for inspection at such office during business hours and extracts may be taken there from, and copies thereof as may be required by any member of the company shall be furnished by the company to such extent, in such manner, and on payment of such fees as may be prescribed.

Books to be kept by Company Liquidator

Section 293 of the Act  provides that the Company Liquidator shall keep proper books in such manner, as may be prescribed, in which he shall cause entries or minutes to be made of proceedings at meetings and of such other matters as may be prescribed.  Any creditor or contributory may, subject to the control of the Tribunal, inspect any such books, personally or through his agent.

Audit of Company Liquidator's accounts

Section 294 (4) of the Act provides that when the accounts of the company have been audited, one copy thereof shall be filed by the Company Liquidator with the Tribunal, and the other copy shall be delivered to the Registrar which shall be open to inspection by any creditor, contributory or person interested.

Information as to pending liquidations

Section 348(4) of the Act provides that any person stating himself in writing to be a creditor or contributory of the company shall be entitled, by himself or by his agent, at all reasonable times, on payment of the prescribed fee, to inspect the statement in such form containing such particulars as may be prescribed, duly audited, by a person qualified to act as auditor of the company, with respect to the proceedings in, and position of, the liquidation, with the Tribunal and to receive a copy thereof or an extract there from.

Investment in other companies, formation of subsidiaries, etc.

Section 378ZL of the Act provides that every Producer Company shall maintain a register containing particulars of all the investments, showing the names of the companies in which shares have been acquired, number and value of shares; the date of acquisition; and the manner and price at which any of the shares have been subsequently disposed of.  The said register shall be kept at the registered office of the Producer Company and the same shall be open to inspection by any Member who may take extracts there from

Inspection of documents kept by Registrar

Section 399 of the Act provides that any person may-

• inspect by electronic means any documents kept by the Registrar in accordance with the rules made, being documents filed or registered by him in pursuance of this Act, or making a record of any fact required or authorised to be recorded or registered in pursuance of this Act, on payment for each inspection of such fees as may be prescribed;
• require a certificate of the incorporation of any company, or a copy or extract of any other document or any part of any other document to be certified by the Registrar, on payment in advance of such fees as may be prescribed.

The rights conferred by this section shall be exercisable-

• in relation to documents delivered to the Registrar with a prospectus in pursuance of section 26, only during the fourteen days beginning with the date of publication of the prospectus; and at other times, only with the permission of the Central Government; and
• in relation to documents so delivered in pursuance of clause (b) of sub-section (1) of section 388, only during the fourteen days beginning with the date of the prospectus; and at other times, only with the permission of the Central Government.

Evidence

A copy of, or extract from, any document kept and registered at any of the offices for the registration of companies under this Act, certified to be a true copy by the Registrar (whose official position it shall not be necessary to prove), shall, in all legal proceedings, be admissible in evidence as of equal validity with the original document.