Section 346 of the Companies Act, 2013
Section 346 of the Companies Act, 2013 deals with the “Inspection of books and papers by creditors and contributories.”
Text of Section 346:
The books and papers of a company which has been wound up shall be open to the inspection of the creditors and contributories, in such manner as may be prescribed.
Key Points:
Applicability: This section applies after the winding up of a company.
Access Granted To:
Creditors (those to whom the company owes money),
Contributories (persons liable to contribute to the assets of the company during winding up, such as shareholders).
Purpose: Allows these stakeholders to inspect the company’s books and papers, to ensure transparency in the winding-up process.
Conditions and Manner: The Central Government may prescribe rules (under the Companies (Winding Up) Rules, 2020) to regulate how this inspection may be conducted.
Practical Implication:
This provision helps in:
Ensuring that the liquidation process is fair,
Preventing fraudulent disposal or manipulation of the company’s records during winding up,
Protecting the interests of stakeholders.
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