Books of Account explained: this guide covers what Books of Account means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Maintaining proper books of account and statutory registers is a fundamental compliance obligation under the Companies Act 2013. These records ensure transparency, accountability, and provide an audit trail for corporate transactions.
Books of Account: Section 128
Every company must prepare and keep books of account and financial statements at its registered office (or such other place in India as the Board may decide) containing a record of:
- All sums of money received and expended
- All sales and purchases of goods and services
- Assets and liabilities of the company
- Items of cost as may be prescribed for companies engaged in production/processing/manufacture
Requirements for Books of Account
| Requirement | Provision |
|---|---|
| Double-entry system | Accrual basis, double-entry system required |
| Preservation period | 8 years from end of financial year (or from date of completion if pending litigation) |
| Place of maintenance | Registered office (or any other place in India notified to ROC in Form AOC-5) |
| Branch accounts | Branch books may be maintained at branch; summaries sent to registered office every 15 days |
| Electronic records | Permitted if accessible and retrievable easily |
Mandatory Statutory Registers
Companies must maintain the following statutory registers:
| Register | Section | Form |
|---|---|---|
| Register of Members | Section 88 | MGT-1 |
| Register of Debenture Holders | Section 88 | MGT-2 |
| Register of Directors and KMP | Section 170 | MBP-4 |
| Register of Charges | Section 85 | CHG-7 |
| Register of Contracts (with related parties) | Section 189 | MBP-4 |
| Register of Loans, Guarantees and Investments | Section 186(9) | MBP-2 |
| Register of SBOs (Significant Beneficial Owners) | Section 90 | BEN-3 |
| Register of Director's Shareholding | Section 170 | MBP-4 |
Register of Members: Key Requirements
The Register of Members is the most important statutory register. It must contain:
- Names and addresses of members with nature of membership
- Date of entry as member and cessation
- Number and amount of shares held
- Amount paid/agreed to be paid on shares
- Distinctive numbers of shares (for physical shares)
- PAN, email, and Aadhaar (for digital records)
For listed companies, the Register of Members is maintained by the Registrar and Transfer Agent (RTA), which also maintains the demat account records through NSDL/CDSL.
Inspection Rights
| Register | Right of Inspection | Charges |
|---|---|---|
| Register of Members | Members: free; Others: fee | Rs.5 per page |
| Register of Charges | Any person: free | Nil |
| Register of Directors | Members: free | Nil |
| Register of Contracts | Members: free | Nil |
Digitization of Registers
Companies may maintain registers in electronic form complying with Rule 27 of Companies (Management and Administration) Rules 2014. Key requirements:
- Data must be backed up regularly
- Adequate security systems in place
- Accessible for inspection at registered office
- Printed copy to be made available on demand
- For listed companies, software must be compatible with RTA systems
Penalties for Non-Maintenance
Failure to maintain required registers and books of account attracts penalties under various sections:
- Section 128: Company fined Rs.5 lakh to Rs.25 lakh; MD/CFO/officer in charge fined Rs.1 lakh to Rs.5 lakh
- Section 88 (Register of Members): Fine Rs.50,000 to Rs.3 lakh; each officer Rs.10,000 to Rs.1 lakh
- Section 189 (Register of Contracts): Company officer fine Rs.25,000 to Rs.1 lakh