Companies Act 2013 - Maintenance of Electronic Records now made optional

Maintenance and inspection of documents in electronic form

120. Without prejudice toany other provisions of this Act, any document, record, register, minutes,etc.,—
(a) required to be kept by a company; or
(b) allowed to be inspected or copies to be given to any person by a company
under this Act, may be kept or inspected or copies given, as the case may be, in electronic form in such form and manner as may be prescribed.

Further, rule 27(1) of the Companies (Management and Administration) Rules, 2014 regarding Maintenance and inspection of document in electronic had made maintenance of record in electronic form mandatory for the following companies:
(i) Every listed company;
(ii) Company having not less than one thousand shareholders, debenture holders and other security holders

It was further provided that in case of existing companies, data shall be converted from physical mode to electronic mode within six months from the date o fnotification of section 120 (i.e. 1 ^st April, 2014)

Amendment made to give discretionary option to companies for Maintenance of documents in electronic form.

Ministry of Corporate Affairs has vide Notification dated 24 ^th July, 2014 has amended the Rule 27 as above to make the requirement of maintenance of records in electronic form as optional for companies covered as (i) and (ii) above.

The clause 2 (iv)of the said notification states that “ in rule 27, in sub-rule (1) and in the Explanation, for the word "shall", the word "may" shall besubstituted.

Download the Notification >>

The sub rule (1) and Explanation is reproduced hereunder for ready reference:

(1)   Every listed company or a company having not less than one thousand shareholders, debenture holders and other security holders, shall maintain its records, as required to be maintained under the Act or rules made there under, in electronic form.

Explanation.-For the purposes of this sub-rule, it is hereby clarified that in case of existing companies, data shall be converted from physical mode to electronic mode within six months from the date of notification of provisions of section120 of the Act.

Guidelines for maintenance of records in electronic Form

As per rule 27(2) of the Companies (Management and Administration) Rules, 2014, the Board of Directors have been authorized to prescribe the manner  in which the records shall be maintained in electronic form. However, the following requirement must be met.

(a)   the records are maintained in the same formats and in accordance with all other requirements as provided in the Act or the rules made there under;

(b)   the information as required under the provisions of the Act or the rules made there under should be adequately recorded for future reference;

(c)   the records must be capable of being readable, retrievable and reproducible in printed form;

(d)   the records are capable of being dated and signed digitally wherever it is required under the provisions of the Act or the rules made there under;

(e)   the records,once dated and signed digitally, shall not be capable of being edited or altered;

(f)    the records shall be capable of being updated, according to the provisions of the Act or the rules made there under, and the date of updating shall be capable of being recorded on every updating.

  Download the the Companies (Management and Administration) Rules, 2014   >>