Statutory Books and Registers of a Private Limited Company​

  • Setindiabiz Team
  • February 9, 2024
statutory books and registers
QUICK SUMMARY ↬ This comprehensive blog delves deeper into one of the most crucial compliance for a company, i.e. maintaining statutory books and registers under the Companies Act. Providing complete information on its legal framework, types, and modes of maintenance, the blog helps achieve greater transparency, efficiency, and accountability in business operations. The ultimate aim is to help readers gain valuable insights into how maintaining statutory registers increases the credibility of a company among its stakeholders.
Statutory books and registers are crucial pillars for ensuring legal compliance and organizational transparency in a company. Mandated under the Companies Act of 2013, these registers serve as meticulous archives of company information, ranging from particulars of its shareholders to records of its board meetings. Statutory registers intricately document the organizational structure, compliance status, operations, and adherence to regulatory standards of a company. As custodians of corporate integrity, these registers facilitate accountability and transparency in administration.

What are Statutory Registers?

Statutory registers, as mandated by the Companies Act, 2013, are foundational documents that record essential information about a company’s operations. They serve as repositories of crucial details such as shareholder particulars, directorships, meeting minutes, investments, and so on. These registers play a crucial role in ensuring transparency, accountability, and adherence to regulatory standards prescribed within law. As essential records, they provide critical data needed for legal proceedings, audits, and stakeholders’ inspections conducted in the due course of business. Moreover, these documents serve as a reflection of the company’s commitment to corporate best practices.

Legal Framework for Statutory Registers Under Companies Act

The Companies Act, 2013 establishes the legal framework for companies in India, outlining requirements for maintaining statutory registers. These registers, containing vital company information, are mandated by various sections of the Act. Let’s delve into the details of each of these sections one by one. The prominent sections we will cover include Sections 85, 88, 90, 94, 95 and 118.

Maintaining Register of Members (Section 88)

Section 88 of the Companies Act, 2013 specifically mandates the maintenance of certain registers by companies. It requires companies to maintain registers such as the Register of Members, Register of Debenture Holders, and Register of Directors and Key Managerial Personnel. These registers are fundamental in documenting the ownership structure, debt obligations, and leadership hierarchy of the company.

Maintaining Register of Charges (Section 85)

Under Section 85 of the Companies Act, 2013, companies are required to maintain a Register of Charges. This register details any charges created on the company’s assets, such as mortgages or loans secured against company property. This ensures transparency regarding the company’s financial liabilities and encumbrances on its assets.

Maintaining Register of Significant Beneficial Owner (Section 90)

Section 90 of the Companies Act, 2013 requires companies to maintain a Register of Significant Beneficial Owners. This register identifies individuals who hold significant beneficial ownership or control over the company’s shares or voting rights. This helps in identifying and disclosing individuals with significant influence or control over the company’s affairs, enhancing transparency and preventing misuse of corporate structures for illicit purposes.

Keeping Registers at Company’s Registered Office (Section 94)

Section 94 of the Companies Act, 2013, mandates the location and accessibility of registers and returns maintained by companies. It stipulates that these registers and copies of annual returns must be kept at the registered office of the company. However, if more than one-tenth of the total number of members reside in a different location, they may also be maintained there with approval through a special resolution. The section ensures accessibility for inspection by members, debenture-holders, and other stakeholders during business hours without fees, and permits the taking of extracts or copies upon payment of prescribed fees. Refusal of inspection may incur penalties, and the Central Government holds authority to intervene if necessary. The exact penalties have been discussed further.

Registers to be Prima Facie Evidence (Section 95)

The registers, their indices, and copies of annual returns maintained under Sections 88 and 94 are considered prima facie evidence of any matter directed or authorized to be inserted therein by or under the Companies Act. This means that these documents are presumed to be accurate and authentic unless proven otherwise, thereby serving as reliable evidence in legal proceedings or disputes concerning the company’s affairs.

Maintaining Register for Minutes of Meeting (Section 118)

Section 118 of the Companies Act, 2013 pertains to the maintenance of minute books containing records of general meetings, board meetings, and meetings of board committees. These minutes serve as a formal record of decisions taken by the company’s stakeholders and leadership, ensuring accountability and compliance with corporate governance standards.

What are the Statutory Books Maintained by a Company?

Let’s discuss various types of statutory books mandated by the Companies Act, 2013. These registers include the Register of Members, Register of Debenture Holders, Register of Charges, Register of Significant Beneficial Owners, Register of Directors and Key Managerial Personnel, Register of Investments in Securities, and more. Each register serves a specific purpose, such as documenting shareholder details, financial transactions, and corporate governance practices, ensuring transparency and regulatory compliance within companies.
  • Register of Sweat Equity Shares: Regulated by Section 54 and Rule 8(14) of the Companies (Share Capital and Debentures) Rules, 2014, this register records details of sweat equity shares issued by the company.
  • Register of Employee Stock Options: Governed by Section 62(1)(b) and Rule 12 of the Companies (Share Capital and Debentures) Rules, 2014, this register maintains information regarding employee stock options granted by the company.
  • Register of Securities Bought Back: Mandated by Section 68(9) and Rule 17(12) of the Companies (Share Capital and Debenture) Rules, 2014, this register documents securities bought back by the company.
  • Register of Deposits: Regulated by Section 73 and Rule 14 of the Companies (Acceptance of Deposits) Rules, 2014, this register records deposits accepted by the company.
  • Register of Charges: Governed by Section 85 and Rule 7 of the Companies (Registration of Charges) Rules, 2014, this register documents charges created on the company’s assets.
  • Register of Members: Maintained under Section 88(1)(a) and Rule 3 of the Companies (Management and Administration) Rules, 2014, this register contains details of the company’s shareholders.
  • Register of Debenture Holders: Regulated by Section 88(1)(b) & (c) and Rule 4 of the Companies (Management and Administration) Rules, 2014, this register records information about debenture holders.
  • Foreign Members Register: Mandated by Section 88(4) and Rule 7 of the Companies (Management and Administration) Rules, 2014, this register maintains details of members residing outside India.
  • Register of Renewed and Duplicate Share Certificates: Governed by Rule 6 of the Companies (Share Capital and Debentures) Rules, 2014, this register documents the issuance of renewed or duplicate share certificates.
  • Register of Significant Beneficial Owners: Regulated by Section 90 of the Companies Act, this register identifies individuals with significant beneficial ownership or control over the company’s shares.
  • Register of Postal Ballot: Mandated by Section 110 and Rule 22 of the Companies (Management and Administration) Rules, 2014, this register documents proceedings and results of voting conducted through postal ballots.
  • Register for Minutes of Meetings: Regulated by Section 118 of the Companies Act, these books contain records of decisions made during meetings.
  • Books of Accounts: Governed by Section 128 of the Companies Act, these books maintain records of the company’s financial transactions.
  • Register of Directors/Key Managerial Personnel: Mandated by Section 170(1) of the Companies Act, this register contains details of the company’s directors and key managerial personnel.
  • Register of Investments in Securities not held in the company’s name: Regulated by Section 18 and Rule 14 of Companies (Meetings of Board and its Powers) Rules, 2014, this register documents investments in securities not held in the company’s name.
  • Register of Loans, Guarantees, and Securities: Governed by Section 186(9) and Rule 12 of Companies (Meetings of Boards and its Powers) Rules, 2014, this register maintains records of loans, guarantees, security provided, or acquisitions of securities made by the company.
  • Register of Contracts with Companies/Firms: Mandated by Section 189(5) and Rule 16 of Companies (Meetings of Boards and its Powers) Rules, 2014, this register documents contracts or arrangements in which directors are interested.

How and Where to Maintain Statutory Books and Registers?

Maintaining statutory books is a crucial aspect of corporate compliance under the Companies Act, 2013. Here, we delve into the methods and locations for maintaining these registers, ensuring adherence to regulatory requirements and facilitating transparency within the company’s operations. Non-adherence may lead to penalties and legal consequences, so carefully follow the provisions mentioned below.

How and Where to Maintain Statutory Books and Registers?

Statutory books can be maintained in various formats, including physical and electronic forms. The Companies Act allows flexibility in the mode of maintenance, permitting companies to choose the most suitable method based on their specific needs and resources.
  1. Physical Registers: Traditionally, statutory registers and books were maintained in bound books or loose-leaf folders kept at the registered office of the company. While physical registers offer a tangible record, they require careful storage and organization to ensure accessibility and preservation.
  2. Electronic Registers: With advancements in technology, many companies opt to maintain statutory registers and books in electronic format. Electronic registers offer several advantages, including ease of access, searchability, and reduced storage space. However, companies must ensure compliance with regulatory requirements regarding electronic maintenance, including data security and integrity measures.

Location of Maintenance

The Companies Act specifies that statutory books must be maintained at the registered office of the company. However, certain registers may also be maintained at other locations within India under specific circumstances, such as the residence of a significant number of members.
  1. Registered Office: The primary location for maintaining statutory registers is the registered office of the company. This ensures centralization of records and facilitates ease of access for stakeholders, including directors, members, and regulatory authorities.
  2. Alternative Locations: In cases where more than one-tenth of the total number of members reside in a location other than the registered office, companies may seek approval through a special resolution to maintain registers at such locations. However, this requires compliance with prescribed procedures and notification to the Registrar of Companies.

Compliances Regarding Statutory Registers under Company Act

Regardless of the mode or location of maintenance, companies must ensure compliance with regulatory requirements regarding the upkeep of statutory registers. Registers must be regularly updated, accurately maintained, and made available for inspection by stakeholders as per the provisions of the Companies Act.
  1. Accessibility for Inspection: Statutory registers must be open for inspection by directors, members, debenture-holders, and other stakeholders during business hours without payment of fees. Non-members may also inspect registers upon payment of prescribed fees.
  2. Penalties for Non-Compliance: Failure to maintain statutory registers or refusal to allow inspection may result in penalties, including fines of up to one thousand rupees for every day of default, subject to a maximum of one lakh rupees. Additionally, non-compliance may lead to legal consequences for the company and its officers, including prosecution and potential imprisonment for a term which may extend to six months.

The meticulous maintenance of statutory books and registers under the Companies Act, 2013 is indispensable for companies seeking to uphold legal compliance, transparency, and effective corporate governance. By adhering to regulatory requirements and diligently updating these registers, companies not only mitigate the risk of penalties and legal disputes but also enhance trust and confidence among stakeholders. The legal and practical benefits of maintaining statutory registers extend beyond mere compliance, serving as a foundation for sound corporate practices, streamlined transactions, and sustainable business growth. As companies navigate the complexities of today’s business landscape, prioritizing the upkeep of statutory registers remains essential for safeguarding their reputation, credibility, and long-term success.

Conclusion

FAQs

Q1: What are statutory registers, and why are they important for companies?

Statutory registers are official records mandated by the Companies Act, 2013, containing essential company information such as shareholder details, director appointments, and financial transactions. They are crucial for legal compliance, transparency, and accountability within companies, serving as evidence of regulatory adherence and facilitating effective corporate governance.

Q2: Can statutory registers be maintained electronically?

Yes, statutory registers can be maintained electronically, provided that companies comply with the regulatory requirements for electronic maintenance, including data security and integrity measures. While physical registers are traditional, electronic formats offer advantages such as accessibility, searchability, and reduced storage space.

Q3: Are statutory books and registers open for inspection?

Yes, statutory registers are open for inspection by stakeholders such as directors, members, and debenture-holders during business hours without payment of fees. Non-members may also inspect registers upon payment of prescribed fees. Companies must ensure accessibility and facilitate inspection as per the provisions of the Companies Act.

Q4: What are the penalties for refusing statutory register inspection?

Failure to maintain statutory registers or refusal to allow inspection may result in penalties, including fines of up to one thousand rupees for every day of default, subject to a maximum of one lakh rupees. Additionally, non-compliance may lead to legal consequences for the company and its officers, including prosecution and potential imprisonment.

Q5: How do statutory registers facilitate due diligence processes during corporate transactions?

Thorough maintenance of statutory registers streamlines due diligence processes by providing prospective investors, buyers, or business partners with access to accurate and up-to-date company information. Well-organized registers instill trust and transparency, expediting decision-making processes and reducing transactional risks for all parties involved.

2 thoughts on “Statutory Books and Registers of a Private Limited Company​”

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