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The Registered Office of XYZ Private Limited is situated in Kolkata. Pursuant to Section 209(1) of the Companies Act, 1956, it wants to keep its books of accounts with respect to: 1. all sums of money received and expended by the company and the matters in respect of which the receipt and expenditure take place, 2. all sales and purchases of goods by the company, and 3. the assets and liabilities of the company, outside its Registered Office, in the Head Office which is within the jurisdiction of the Registered Office. Further, pursuant to Section 163 of the Companies Act, 1956, the said Company also wants to keep the index of members, the register and index of debenture holders and copies of all annual returns in that same head office. What is the procedure to be followed in this respect? Will the procedure be same if the Company is a Public Company?
All or any of the books may be kept at any place in India
All or any of the books of account aforesaid may be kept at any place in India other than the registered office, as the Board of directors of the company may decide. When the Board so decides, the company shall, within seven days of the decision, file a notice in e-Form 23AA electronically with the Registrar of Companies giving the full address of that other place.
The Department has clarified that proper books of account can be kept at a place other than the Registered office of the company if there are compelling reasons for keeping books at such other place. Shortage of place at registered office of a company may constitute a compelling reason for maintenance of books of account at other place.
04 December 2013
Meaning of 'Proper Books of Account' The expression 'proper books of account' has not been defined in the Companies Act, 1956. Section 2(8) defines that the "books or paper" include accounts, deeds, vouchers, writings and documents. Keeping the accounts of a company on cash or receipt basis would not amount to keeping "proper books of account" in terms of the provisions of sub-sections (1), (2) and (3) of section 209. The books of account required to be maintained under section 209 shall be prepared and maintained in indelible ink for giving a proper and adequate meaning to the words "proper books of account". Further, section 209(3) details the cases when proper books of account shall not be deemed to have been kept with respect to the matters specified therein by a company. In terms of the provisions of section 209(3) proper books of account shall be considered have been kept with respect to the matters specified therein, if following two cumulative conditions are satisfied:— (a) Books which are necessary to give a true and fair view of the state of the affairs of the company or branch office, as the case may be, and to explain its transactions are kept. (b) Books are kept on accrual basis and according to the double entry system of accounting. In determining whether, the proper books of account have been kept by a company, it will be ascertained that there is no suppression of any transaction and no fictitious transactions have been entered in the books. It has been clarified by the Department that writing of books of account by pencil is not advisable, in as much as books of account should be prepared and maintained in indelible ink for giving a proper and adequate meaning to the "proper books of account" in section 209.
04 December 2013
Section 209 applies to all companies
The provisions of section 209 apply to both private limited and public limited companies.
A company shall be deemed to have kept proper books of account in relation to its branch office, whether in or outside India, if proper books of account relating to the transactions effected at the branch office are kept at the branch office. Further, proper summarised returns made up to date at intervals of not more than three months must be sent by the branch office to the company at its registered office or the other place where books of account of the company are kept.
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