Section 128 of the Companies Act, 2013
Section 128 of the Companies Act, 2013 pertains to the maintenance of books of account by companies.
✅ Section 128 – Books of Account, etc., to be kept by Company
Key Provisions:
Books of Account to be kept:
Every company must prepare and keep books of account and other relevant books and papers, along with the financial statements for every financial year.
Place of Maintenance:
The books of account must be kept at the registered office of the company.
They can also be kept at any other place in India, as decided by the Board of Directors.
👉 The company must inform the Registrar (ROC) about the alternate location within 7 days.
Form and Method:
The books may be kept in electronic mode as prescribed.
They must give a true and fair view of the state of affairs of the company.
Contents of Books of Account:
The books must include details related to:
All money received and expended
All sales and purchases
Assets and liabilities
In the case of a branch office, proper summarized returns must be sent regularly to the main office.
Inspection:
The books of account are open for inspection by any director during business hours.
Inspection rights cannot be denied even to directors who do not manage day-to-day affairs.
Retention:
The books of account must be preserved for at least 8 years immediately preceding the current financial year.
Penalty for Non-Compliance:
The Managing Director, Whole-time Director (in charge of finance), Chief Financial Officer, or any other responsible person, and the company itself, can face:
Fine up to ₹5 lakhs, or
Imprisonment up to 1 year, or
Both, for failure to comply.
📌 Example:
If a company fails to maintain proper financial records or hides them from directors, it can be penalized under Section 128.
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