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CS Executive · Setting Up of Business, Industrial and Labour Laws · Setting up of Branch Office, Liaison Office and Wholly Owned Subsidiary by Foreign Company

Nippon Tools Ltd, a Japanese company, runs a branch office in Chennai. The Chennai branch keeps proper books of account for its own transactions at the branch and sends proper summarised returns periodically to the company's registered office. A question arises about compliance with the Companies Act, 2013 on books of account. What is the position?

The company is deemed to have complied with section 128(1). Under section 128(2), keeping proper books at the branch and periodically sending proper summarised returns to the registered office satisfies the requirement, so physical transfer of branch records is not required.

  1. AThe company is deemed to have complied with section 128(1) as to its branchCorrect
  2. BThe company must keep all branch vouchers physically at its registered office
  3. CThe branch must file its books with the Registrar every month
  4. DBranch transactions need not be reflected in the company's accounts at all

Explanation

Section 128(2) says that where a company has a branch office in India or outside India, it is deemed to comply with sub-section (1) if proper books relating to branch transactions are kept at the branch and proper summarised returns are sent periodically to the registered office. The option requiring branch vouchers at the registered office is wrong because the deeming provision removes that need.

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