Section 457 of the Companies Act, 2013
Section 457 – Power of Registrar to Call for Information, Inspect Books and Conduct Inquiries
Text (Simplified):
This section gives the Registrar of Companies (RoC) the authority to inspect, inquire into, and call for information or documents from a company in order to ensure that the company is complying with the provisions of the Companies Act, 2013.
Key Points of Section 457
Authority Given:
The Registrar of Companies or any officer authorized by the Central Government can exercise these powers.
Purpose: To ensure compliance with the Act and to investigate any irregularities in a company’s management or accounts.
Power to Call for Information:
The Registrar can require a company or its officers to provide:
Documents,
Books of accounts,
Other relevant information.
This is usually done in writing, specifying what needs to be submitted and within what time.
Power to Inspect Books and Records:
The Registrar can inspect any document or register maintained by the company.
Inspection can be at the registered office or any other place where records are kept.
Power to Conduct Inquiry:
The Registrar can investigate matters relating to:
Mismanagement,
Fraud,
Non-compliance with the Companies Act.
Inquiry can include examining accounts, contracts, or minutes of meetings.
Compliance by Company:
The company and its officers are legally bound to provide the requested information.
Failure to comply can attract penalties under the Act.
Purpose of Section 457:
To ensure transparency and accountability in corporate governance.
To detect and prevent fraud or mismanagement in companies.
To assist authorities in enforcing the Companies Act effectively.
Illustration / Example
A company is suspected of not maintaining proper accounting records.
The Registrar of Companies issues a notice under Section 457 to the company asking for:
Copies of financial statements,
Registers of directors,
Minutes of board meetings.
The company must provide these within the stipulated time.
If the company fails to comply, the Registrar may take further action under the Act.
Significance
Checks corporate mismanagement: Prevents companies from hiding financial irregularities.
Ensures compliance: Companies cannot evade the provisions of the Companies Act.
Supports regulatory authorities: Enables the government to act against companies involved in fraudulent or illegal activities.
Summary in Simple Words
Who: Registrar of Companies or authorized officer
What: Can call for information, inspect books, and conduct inquiries
Why: To ensure compliance with the Companies Act, 2013
Effect: Companies must provide documents or information; non-compliance can lead to penalties
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