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Home List Manuals Companies LawCompanies Act, 1956 - Ready Reckoner [OLD]Ready Reckoner - Companies Act, 1956 This

Companies Act, 1956 - Ready Reckoner [OLD]

Ready Reckoner - Companies Act, 1956

CORPORATE ACCOUNTABILITY – I – ACCOUNTS

  • Contents

CORPORATE ACCOUNTABILITY – I – ACCOUNTS

Books of account to be kept by company – Section 209

Every company shall keep at its registered office proper books of account with respect to

  • all sums of money received and expended by the company and the matters in respect of which the receipt and expenditure take place;
  • all sales and purchases of goods by the company;
  • the assets and liabilities of the company;
  • in the case of a company pertaining to any class of companies engaged in production, processing, manufacturing or mining activities, such particulars relating to utilization of material or labour or to other items of cost as may be prescribed, if such class of companies is required by  the Central Government to include such particulars in the books of account

All or any of the books of account aforesaid may be kept at such other place in India as the Board of directors may decide and when the Board of directors so decides, the company shall, within seven days of the decision, file with the Registrar a notice in writing giving the full address of that other place.

Liability where proper accounts not kept – Section 541(2)

If it is shown that proper books of account were not kept by the company throughout the period of two years immediately preceding the making of the application to Tribunal under section 397 or 398, or the period between the incorporation of the company and the making of the application, whichever is shorter, every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to one year.

Preservation of Books of Accounts – Section 209(4A)

The books of account of every company relating to a period of not less than eight years immediately preceding the current year together with the vouchers relevant to any entry in such books of account shall be preserved in good order.

Inspection of Books and Accounts

  • Director’s Right of inspection – Section 209 (4) - The books of account and other books and papers shall be open to inspection by any director during business hours
  • Member’s Right of inspection – No such right to inspect the books by members except as conferred by law or authorized by the company in general meeting.
  • Auditor’s right of inspection of accounts – Section 227(1) – Empowers an auditor with the right of access at all times to the company’s account.

Section 209(1) r.w.s. 541(2) provides for the maintenance of proper books of accounts and they obviously include the cost accounting records [Section 209(1) (d)] and stock records [Section 541(2)], apart from normal books of accounts.

Persons responsible for Keeping Books of Accounts – Section 209(6)

  • where the company has a managing director or manager, such managing director or manager and all officers and other employees of the company
  • where the company has neither a managing director nor manager, every director of the company

Statutory Books

  1. Register of investments have been made, by a company are not held by it in its own name – Section 49(7)
  2. Register of Fixed deposits
  3. Register of Securities bought back [Section77A(9)]
  4. Register Of Charges – Section 143(1)
  5. Register Of Members – Section 150(1)
  6. Index of Members where the number exceeds 50 – Section 151(1)
  7. Register and index of debenture holders – Section152
  8. Register and index of beneficial owners to be of debenture holder – Section 152A
  9. Foreign register of members or debenture holders.- Section 157(1) and158
  10. Books of minutes of proceedings of general meetings and of Board and other meetings – Section 193(1)
  11. Dividend Register
  12.  Books of Accounts [Under Section 209(1)(a) to(c)]
  13. Cost accounts records – Section 209(1)(d)
  14. Register of contracts, companies and firms in which directors are interested – Section 301(5)
  15. Register of directors etc. – Section 303(1)
  16.  Register of directors' shareholdings, etc. – Section 307(1)
  17. Register of all investments made by it in shares of any other body or bodies corporate – Section 372(6)
  18. Register of Loans, etc., to companies under the same management - Section 370 (1C)
  19. Register of Inter-corporate loans and investments – Section 372A(5A)

Statistical Books

  1. Share Application and Allotment Book
  2. Share Call Book
  3. Share Certificate Book
  4. Debenture Interest Book
  5. Director’s Attendance Book
  6. Agenda Book
  7. Dividend Mandate Register
  8. Share Warrant Register
  9. Register of Certified Transfers
  10. Register of lost share certificates
  11. Register of Power of Attorney
  12. Register of Probates
  13. Register of documents sealed

Annual Accounts: Balance Sheet and Profit and Loss Account

Section 210 of the companies s act provide for laying of annual accounts before Annual General Meeting and Section 211 relates to form and content of balance sheet and profit and loss account.

Default in laying of Accounts – Section 210(6)

If any person, not being a director of the company, having been charged by the Board of directors with the duty of seeing that the provisions of this section are complied with, makes default in doing so, he shall, in respect of each offence, be punishable with imprisonment for a term which may extend to six months, or with fine which may extend to ten thousand rupees, or with both.

Penalty for improper issue, circulation or publication of balance sheet or profit and loss account – Section 218

Authentication of balance sheet and profit and loss account by Secretary – Section 215

Right of member to copies of balance sheet and auditors' report – Section 219 - A copy of every balance sheet (including the profit and loss account, the auditors' report and every other document required by law to be annexed or attached, as the case may be, to the balance sheet) which is to be laid before a company in general meeting shall, not less than twenty-one days before the date of the meeting, be sent to every member of the company.

Section 349 - Determination of net profits for the purpose of calculating managerial remuneration.    

Directors’ Report – Section 271

There shall be attached to every balance sheet laid before a company in general meeting, a report by its Board of directors, with respect to-

     (a) the state of the company's affairs;

     (b) the amounts, if any, which it proposes to carry to any reserves in such balance sheet

     (c) the amount, if any, which it recommends should be paid by way of dividend;

     d) material changes and commitments, if any, affecting the financial position of the company which have occurred between the end of the financial year of the company to which the balance sheet relates and the date of the report;]

    (e) the conservation of energy, technology absorption, foreign exchange earnings and outgo, in such manner as may be prescribed.

Particulars in respect of certain employees – Section 217(2A)

Directors Responsibility Statement – Section 217(2AA)

The Board's report shall also include a Directors' Responsibility Statement, indicating therein,

          (i) that in the preparation of the annual accounts, the applicable accounting standards had been followed ,

          (ii) that the directors had selected such accounting policies so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit or loss of the company for that period;

          (iii) that the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

          (iv) that the directors had prepared the annual accounts on a going concern basis.

Balance sheet of holding company to include certain particulars as to its subsidiaries – Section 212

 

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