20 March 2021
Dear All, I am a director of a newly incorporated company.
I have small query regarding form AOC 5 to keep all or any of the books of account in any other place in India other than the registered office.
Does this other place required to be under the name of the company ? I mean does it require to make a rent agreement under company's name for the other place to keep the documents?
Or as a director, I can keep them at my home which is rented in my own name ? I anyway have a small office here that I use only for work related to company.
07 July 2024
For a newly incorporated company in India, when considering where to keep the books of account other than at the registered office, it's essential to follow the requirements laid out under the Companies Act, 2013. Here’s a detailed clarification based on your query:
1. **Location for Keeping Books of Account**: - As per Section 128 of the Companies Act, 2013, a company can choose to keep its books of account at a place other than its registered office, within the same city or town where the registered office is situated, or at any other place in India with the approval of the Board of Directors.
2. **Rent Agreement Requirements**: - The other place where the books of account are kept does not necessarily need to be under the name of the company. It can be under the name of a director or another entity, provided that the necessary approval and documentation are in place. - If the books of account are to be kept at a place other than the registered office and it is rented, it's advisable to have a rent agreement in place. This agreement should clearly state the terms under which the premises are rented and the purpose for which the space is used (i.e., for keeping the company's books of account).
3. **Director’s Home Usage**: - As a director, if you have a separate office space at your rented home that you use exclusively for company-related work, including the storage of books of account, this can be considered. However, it should be clearly documented and approved by the Board of Directors. - Ensure that there is a clear understanding and documentation (possibly through Board Resolutions or Minutes) that the space in your home office is used for company purposes, and specifically, for keeping the books of account.
4. **Compliance and Documentation**: - Regardless of the location chosen (whether at a director’s home office or another rented place), it’s crucial to maintain compliance with the Companies Act and maintain proper documentation. - Ensure that the Board of Directors approves the decision to keep the books of account at the chosen location, and document this decision appropriately in the Board Meeting Minutes or Resolutions. - Keep records of the rent agreement (if applicable), approval from the Board, and any other relevant documentation to demonstrate compliance during audits or inspections.
In summary, while it's permissible to keep the books of account at a location other than the registered office, such as a director’s rented home office, ensure that proper approvals are obtained from the Board of Directors and that all necessary documentation is in place to comply with regulatory requirements. If you have any specific concerns or uncertainties, consulting with a professional such as a company secretary or a chartered accountant can provide tailored advice based on your company's specific circumstances and needs.
CAclubindia
