Documentation and Maintenance of Records: formula sheet

Key formulas

Document vs record

Document = a paper or file stating or authorising an act; Record = a document or entry preserved as evidence of that act

Every record starts as a document, but not every document is kept as a record.

Electronic records (Section 120)

Records required to be kept, or open to inspection, may be kept or inspected in electronic form in the prescribed form and manner

This is without prejudice to other provisions of the Act.

Inspector's custody limit (Section 217(3))

Books and papers produced to an inspector: custody not more than 180 days, then return; may be called again for a further 180 days by written order

Do not confuse this with seizure under section 220.

Duty on officers under investigation (Section 217(1))

Preserve and produce all books and papers in custody or power + give all reasonable assistance

Applies to current and former officers, employees and agents.

Penalty for failing to produce (Section 217(8))

Imprisonment up to 6 months + fine ₹25,000 to ₹1,00,000 + further fine up to ₹2,000 per day after the first while the failure continues

Applies where a person fails without reasonable cause or refuses to produce, furnish information, appear or sign notes.

Amalgamated company's books (Section 239)

Books and papers of an amalgamated company, or one whose shares are acquired, are not to be disposed of without prior Central Government permission

The Government may appoint a person to examine them for evidence of an offence.

Registrar's copies (Section 399(3))

Registrar-certified true copy or extract = admissible in all legal proceedings, equal validity to the original

The Registrar's official position need not be proved.

Place of keeping: registers and annual return copies (s. 94(1))

Registered office; or another place in India where more than 1/10 of the total members entered in the register of members reside, if a special resolution is passed at a general meeting

The condition is that more than one-tenth of members reside there. The old requirement of giving the Registrar a copy of the proposed resolution in advance has been omitted.

Inspection rights (s. 94(2))

Members, debenture-holders, other security holders and beneficial owners: free, during business hours. Any other person: on payment of prescribed fees

Registers and indices can be inspected except when closed under the Act. Prescribed particulars are not open to inspection or copying.

Extracts and copies (s. 94(3))

Extracts: free of fee. Copy of a register, entries or return: on payment of prescribed fees

The right belongs to members, debenture-holders, other security holders, beneficial owners and any other person.

Penalty for refusing inspection (s. 94(4))

₹1,000 per day of default, maximum ₹1,00,000

Applies to the company and every officer in default. Central Government may order immediate inspection under s. 94(5).

Books of account: place and basis (s. 128(1))

Registered office; accrual basis; double entry system

Board may decide another place in India and must file notice with the Registrar within 7 days giving the full address. Electronic mode is allowed as prescribed.

Preservation of books of account (s. 128(5))

Not less than 8 financial years immediately preceding a financial year, with vouchers

If the company is younger than 8 years, keep records for all preceding years. After an investigation order under Chapter XIV, the Central Government may direct a longer period.

Penalty under s. 128(6)

Fine of ₹50,000 to ₹5,00,000

Falls on the managing director, whole-time director in charge of finance, CFO or other person charged by the Board. Imprisonment was omitted in 2020.

Director's inspection of books (s. 128(3))

Any director, during business hours, at the registered office or other place in India

For a subsidiary, inspection only by a person authorised by a Board resolution.

Evidentiary value (s. 95)

Registers, indices and annual return copies under ss. 88 and 94 = prima facie evidence

Proof of matters the Act directs or authorises to be inserted.

Amalgamated company records (s. 239)

No disposal of books and papers without prior permission of the Central Government

Applies to a company amalgamated with, or whose shares were acquired by, another company under that Chapter.

Scope of section 120

Document, record, register, minutes, etc. required to be kept by a company OR allowed to be inspected or copied under the Act → may be kept, inspected or copied in electronic form

Two limbs: (a) required to be kept, (b) allowed to be inspected or copied. Both are enabling.

Form and manner

Electronic form in such form and manner as may be prescribed

The details come from the rules, not from the section. Say this in every answer.

Section 120 versus section 94

Section 120: how (electronic form). Section 94: where kept, who inspects, fees, refusal penalty

Section 120 works "without prejudice to" other provisions, so section 94 still applies.

Refusal of inspection under section 94

Penalty ₹1,000 per day of default, maximum ₹1,00,000, on the company and every officer in default

Applies where inspection, extract or copy under section 94 is refused.

Registrar-side provisions

Section 397: authenticated electronic copies admissible as evidence. Section 398: electronic filing. Section 399: inspection of Registrar's records

These concern the Registrar's records, not the company's own records under section 120.

Source of selection

Independent director may be selected from a data bank of eligible and willing persons (s.150(1))

Section 150(1) is subject to section 149(6). The data bank is maintained by a body notified by the Central Government and shown on its website.

Responsibility for due diligence

Due diligence before selection = the appointing company's responsibility

This is the proviso to s.150(1). The data bank does not take over this duty.

Approval of appointment

General meeting approval under s.152(2) + explanatory statement with justification (s.150(2))

The notice must say why this person was chosen.

Maintenance of data

Data bank data created and maintained as per prescribed rules (s.150(3))

Registration and proficiency test details come from the rules.

Manner of selection

Central Government may prescribe manner and procedure of selection (s.150(4))

Applies to those who fulfil the qualifications and requirements under s.149.

Minimum two categories (listed entities)

Category A: permanent. Category B: not less than 8 years after completion of the relevant transaction

Policy must be approved by the board. Documents may be kept in electronic mode. A company may add more categories.

Website disclosures

Disclosures made under the event-disclosure regulation stay on website for at least 5 years, then as per the archival policy

The archival policy must itself be disclosed on the company website.

Retention period counting

Retention period runs from completion of the transaction, not from the date of the document

A voucher for a transaction completed on 31 March 2018 must be kept until at least 31 March 2026 under the eight-year class.

Approval and ownership

Board approves the policy; a named custodian (often the Company Secretary) implements it

Destruction needs written authorisation and a record of what was destroyed and when.

Quick revision

• A record is evidence: it proves what the company did and when.
• Section 120 covers documents, records, registers and minutes kept or inspected in electronic form.
• Under section 120, the form and manner of electronic keeping are as prescribed.
• Section 120 applies to documents required to be kept and to those allowed to be inspected or copied.
• Section 150: an independent director may be selected from a data bank of eligible and willing persons.
• The data bank is maintained by a body, institute or association notified by the Central Government.
• The company that appoints from the data bank must itself exercise due diligence.
• Section 150(2): appointment is approved in general meeting, and the explanatory statement must justify the choice.
• Section 150 data is created and maintained as per the rules prescribed.
• A good archival policy states scope, document classes, retention, storage, access, disposal and review.
• Never fix a retention period from memory; state the period the relevant law prescribes.
• In a case answer, write provision, analysis, conclusion, then a practical compliance point.

Common mistakes

• Treating documents and records as the same thing. Fix: Say that a document states or authorises an act and a record preserves evidence of it. Give one example of each.
• Saying section 120 makes all records electronic. Fix: Write that records may be kept or inspected in electronic form, in the prescribed form and manner. It is permissive, not compulsory for every record.
• Saying registers can be kept anywhere in India by Board decision. Fix: For registers and annual return copies, another place needs a special resolution and more than one-tenth of members residing there. Only books of account use the Board decision with notice to the Registrar within seven days.
• Writing that all persons inspect registers free of charge. Fix: Free inspection is for members, debenture-holders, other security holders and beneficial owners. Any other person pays the prescribed fee.
• Saying section 120 makes electronic records compulsory. Fix: Write that it is permissive. A company may still keep physical records unless some other provision requires otherwise.
• Confusing section 120 with sections 397 to 399. Fix: Section 120 is about the company's own records. Sections 397 to 399 concern documents filed with or kept by the Registrar.
• Saying the data bank body checks independence, so the company has no due diligence duty. Fix: Quote the proviso to section 150(1): responsibility for due diligence lies with the company making the appointment.
• Saying the Board alone can appoint an independent director. Fix: State that section 150(2) requires approval in general meeting, as provided in section 152(2).
• Treating preservation and archival as the same thing. Fix: Say preservation is about what is kept and for how long. Archival is about how older records are stored and retrieved, and how website disclosures are kept after five years.
• Counting the eight years from the date of the document. Fix: Count from completion of the relevant transaction.

Exam tips

• Open every answer with a one-line definition. Examiners reward clear terms before analysis.
• In case-based questions, link each point to a named document in the facts instead of listing generic benefits.
• Learn the numbers in section 217 exactly: 180 days, one year, six months, ₹25,000, ₹1,00,000 and ₹2,000 per day.
• Keep sections 217(3) and 220 apart. One is custody of produced papers, the other is seizure.
• End with a practical compliance point, such as a retention policy, electronic backup or a register of records.
• Write section numbers only for ss. 88, 92, 94, 95, 128, 206 and 207, where you are sure. Otherwise describe the rule in plain words.
• Always give amounts with the cap, such as ₹1,000 per day up to ₹1,00,000.
• Separate registers (s. 94) from books of account (s. 128) in your answer. Examiners test the difference in place and preservation.