Where to keep Company’s Books Of Account – Section 128 of Companies Act 2013

Section 209 of old Companies Act 1956 which deals with Books of account to be kept by a company now replaces with the new section 128 of Companies Act 2013.

As per the provisions of section 128 of Companies Act 2013, every Company shall prepare and keep at its registered office, books of account and other relevant books and papers and financial statements for every financial year which give a true and fair view of the state of affairs of the company, including that of its branch office or offices, if any, and explain the transactions effected both at the registered office and its branches and such books shall be kept on accrual basis and according to the double entry system of accounting.

company books of account

Books of account and other relevant papers may be kept in such other place in India as the company’s board of directors may decide. If such decision is taken then the company shall within 7 days thereof, file with the ROC a notice in writing giving the full address of that other place.

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In case the company has a branch office in India or outside then it will be treated as deemed to have complied with the provisions required maintaining books of account and other relevant documents, if proper books of account relating to the transactions effected at the branch office are kept at that office and proper summarized returns are periodically sent to the company at its registered office or the other place where company maintain its books of account.

In old Companies act 1956, there was a time limit of 3 months to send summarized returns to company’s registered office or to other places where books of account and other relevant books and papers are maintained. Now with the new provision in section 128 of Companies Act 2013, branches are required to send summarized returns periodically, three months time limit not specified.

When financial information maintained outside the country is required by the director then on a request from the director company should produce such financial information as asked for to the director within 15days from the date of receipt of the written request.

What is Books of account?

Books of account is defined under section 2(13) of Companies Act 2013. As per clause (13) of section 2, Books of account includes records maintained in respect of:

  • All sum of money received and expended by a company and matter in relation to which the receipts and expenditure take place;
  • all sales and purchases of goods and services by the company;
  • the assets and liabilities of the company; and
  • the items of cost as may be prescribed under section 148 in the case of a company which belongs to any class of companies specified under that section.

Time limit for keeping books of account for a company

Sub section 5 of section 128 talks about the time limit in number of year for which a company has to keep its books of account.

As per Section 128(5) of Companies Act 2013, books of account of every company relating to a period of not less than 8 financial year immediately preceding a financial year shall be kept in good order.

If the company is in existence for a period of less than 8 years then the company has to maintain books of account in respect of all the preceding years in good order.

Even the act says that the company is required to maintain vouchers relevant to any entry in books of account of a year.

If an investigation has been ordered in respect of the company under chapter XIV, the central government may direct that the books of account may be kept for such longer period as it may deem fit.

Electronic Mode of keeping books of account

As per the provisions of Section 128 of Companies Act 2013, company may keep books of account or other relevant documents in electronic mode in such manner as may be prescribed.

Manner of books of account to be kept in electronic mode is provided under rule 3 of Companies (Accounts) Rules, 2014.

Books of account maintained in electronic mode shall remain accessible in india so as to be usable for subsequent use. The information in the electronic record of the document shall be capable of being displayed in legible form.

Following things company shall intimate to the ROC on an annual basis at the time of filing of financial statement;

  • the name of the service provider
  • the internet protocol address of the service provider
  • the location of the service provider
  • where the books of account and other books and papers are maintained on cloud, such address as provided by the service provider

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