In our last article we have discussed about books of accounts that a private or public limited company is required to maintain and time limit to maintain it. In this article we will be discussing who and when books of accounts can be inspected and penalty provisions if books of accounts are not maintained as required by law.
Section 128 of Companies Act 2013 talks about who can inspect Books of account and other relevant books and papers and financial statements of a company in India and outside. It also specified when such inspection is to be carried out and how a person can be authorised to carry out inspection for a subsidiary company.
Section 128 also has a penalty provision which specify the quantum of penalty that can be imposed on responsible person for not maintaining books of accounts and other details are required by law.
Inspection of Company Books of Accounts
Sub Section 3 and 4 of Section 128 of Companies Act 2013 talks about Inspection of Books of Accounts of a company.
As per sub section 3 of Section 128 of Companies Act 2013, 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 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.
Inspection in respect of a subsidiary of the company shall be done only by the person authorized in this behalf by a resolution of the board of directors.
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Penalty for not maintaining company books of accounts
Sub section 6 of Section 128 of Companies Act 2013 talks about penalty for not maintaining books of accounts for a company.
As per the provisions of sub section 6, if the managing director, the whole-time director in charge of finance, the chief financial officer or any other person of a company charged by the board with the duty of complying with the provisions of this section, contravenes such provisions then such managing director, whole time director in charge of finance, chief financial officer or such other person of the company shall be punishable with imprisonment for a term which may extend to one year or with fine which shall not be less than 50000 rupees but which may extend to 5 lakh rupees or with both.