Company Registration

Companies (Accounts) Amendment Rules, 2023

calendar18 Mar, 2023
timeReading Time: 6 Minutes
Companies (Accounts) Amendment Rules, 2023

The Ministry of Corporate Affairs (MCA) notified the Companies (Accounts) Amendment Rules, 2023, on 20 January 2023 to amend the Companies (Accounts) Amendment Rules of 2014. The MCA amended the latter in the exercise of the powers conferred upon it under various provisions of the Companies Act of 2013, namely Section 128 (1) and (3), Section 129 (3), Section 133, Section 134, Section 135 (4), Section 136 (1), Section 137, Section 138 and Section 469. The Companies (Accounts) Amendment Rules, 2023, come into effect on 23 January 2023.

The Companies (Accounts) Rules of 2014 provides for rules for the maintenance of book of accounts, features of the financial statements of a company, the manner in which accounts shall be consolidated, board report based on the financial statements of the company, foreign exchange earnings and outgo, financial statements and the manner of its circulation, filing of financial statements with the Registrar, the appointment of internal auditor among other things.

Amendments to the Companies (Accounts) Amendment Rules, 2023

The Companies (Accounts) Amendment Rules, 2023 has amended form number AOC-5 which is attached in the Annexure to the Companies (Accounts) Amendment Rules of 2023. Form AOC-5 pertains to the notice details of the address where the book of accounts has to be maintained. Before delving into a deeper understanding of the amendments, let us first understand the basics pertaining to them.

What Falls Under The Purview Of The ‘Book Of Accounts’?

In accordance with Section 2(13) of the Companies Act of 2013, a book of accounts shall include records or data maintained for the following purposes:

  • All the sums of money expanded and received by a company pertaining to which expenditure and receipts take place.
  • All the sales and purchase of services and goods by a company.
  • The liabilities and assets of a company, and
  • The items of cost as may be provided under section 148 of the Companies Act of 2013 if the company falls under the class of companies mentioned under the section.

Book of Accounts and other relevant papers will be required to be prepared by all companies, and they are also required to keep them at the registered office of the company or any other place which has been decided upon by the board of directors.

Steps to Maintain Book of Accounts at a Place Other Than the Registered Office

  • Conduct a Board Meeting

A board meeting shall be held in accordance with the standards which have been prescribed for board meetings by the ICSI[1] in SS-1 with the agenda of discussing and deciding upon a place in India other than the registered office of the company where the book of accounts shall be maintained. A resolution is required to be passed in this regard.

  • Filing Form AOC-5

The company is required to file Form AOC-5 to intimate the Registrar of companies of details pertaining to the address of such other place in India where the book of accounts shall be maintained. Form AOC-5 is required to be filed before the expiry of seven days from the date on which the board resolution was passed with full address details of such other place.

What is Form AOC-5?

As mentioned above, Form AOC-5 deals with details pertaining to the address where the book of accounts is being maintained and which is required to be filed with the Registrar of Companies. The law governing Form AOC-5 is Section 128 of the Companies Act of 2013 and Rule 2(A) of the Companies (Accounts) Rules of 2014.

Section 128 of the Companies Act of 2013 puts an obligation on companies to maintain the book of accounts, financial statements giving an accurate view of the state of affairs and the condition of the company along with its branch offices, and other relevant papers and books at the registered office of the company. All the above mentioned must be maintained in a manner which gives a clear understanding of the transactions carried out at the registered office and branch office of the company. The books are required to be maintained in accordance with the double entry accounting system and must be kept on an accrual basis. Any or all of the book of accounts can be held at any place other than the registered office of the company, which has been mutually decided upon by the Board of Directors as well. Once a decision regarding the place has been made, the complete address of the place has to be intimated to the Registrar of Companies before the expiry of 7 days. Such book of accounts or papers can also be maintained in electronic form.

Section 128 of the Companies Act of 2013 essentially states that the book of accounts and other relevant papers can be kept at a place in India other than the registered office of the company after obtaining the approval of the board of directors of the company. A resolution must be duly passed in a board meeting of the company on the location of the other place where the book of accounts shall be kept. The company is also under the obligation intimate the Registrar of companies of such change.

Rule 2(A) of the Companies (Accounts) Rules of 2014 provides that the notice to the Registrar, giving details of the address of the registered office or any other place agreed to by the Board of Directors to keep the book of accounts, as provided under the proviso of Section 128 of the Companies Act of 2013, shall be given under Form AOC-5.

Purpose of Filing Form AOC-5

The primary purpose of Form AOC-5 is to properly maintain the book of accounts of a company for the following purposes:

  • To review all the transactions undertaken by the company, including the money being expended and received by a company. It also helps get an idea of the significant areas where the funds of the company are being used.
  • For the purchase and sales made by a company.
  • To get a clear picture of the assets and liabilities of a company.
  • If the company engages in varied activities like mining, processing, manufacturing, and production, among other things, the book of accounts shall give an idea of the specifics regarding the utilisation of material and labour, among other things, as prescribed by the Central Government, if the Government mandates that any particular companies or class of companies shall do so.

Amended Form AOC-5 under Companies (Accounts) Amendment Rules, 2023

The amended Form AOC-5 is attached to the Annexure of the Companies (Accounts) Amendment Rules, 2023.

The essential details which are required to be filled in the amended form are as follows:

  • Company information like corporate identification number or CIN, name of the company, registered office address of the company, and date on which the board resolution where the decision regarding the address of the place where the book of accounts shall be maintained was convened.
  • Detailed address of the office space or the registered office where the book of accounts will be maintained. Details regarding the latitude, longitude, country, pin code or zip code, area or locality, city, district and state or union territory at the office space or the registered office are required to be submitted.
  • Information regarding the police station under whose jurisdiction the office space or registered office where the book of accounts of the company shall be maintained falls under. The address should be comprehensive, the details pertaining to the latitude, longitude, country, pin code or zip code, area or locality, city, district and state or union territory at the office space or the registered office.

The Following Are The Attachments Which Are Required To Be Submitted Along With Form AOC-5:

  • Proof of address of the office space or registered office where the book of accounts is maintained. This shall include a sale deed, lease deed or rent agreement along with the rent receipts. If the property on which the registered office or office space is situated is rented, then standard NOC from the property’s landlord shall also be submitted.
  • Copies of utility bills like electricity bills or the telephone bill of the office space or registered office. The utility bills must not be older than two months from the date on which the form is being submitted.
  • Pictures of the registered office, which clearly display the external building and of the inside of the office space with at least one director or a key managerial personnel whose signature is affixed to the form.
  • Any other optional attachment.

Form AOC-5 also has a declaration by either a director or a key managerial personnel with their digital signature stating that they have been authorised by the company’s board of directors through a resolution to sign the form and to declare that all the requirements and compliances required under the Companies Act of 2013 and the Companies (Accounts) Rules, 2014 have been complied with. The declaration shall also involve the undertaking that all the information provided in the form is correct, complete and accurate to the knowledge of the person signing along, that there has been no suppression of any material information, and that the attachments which have been submitted along the form are genuine and authentic.

The director identification number or DIN or PAN of the CEO, CFO or the manager shall also be submitted.

In contrast to most forms under the Companies Rules of 2014, the contents of Form AOC-5 are not required to be certified by a company secretary in practice or cost accountant in practice or chartered accountant in practice.

Penalty for Non-Compliance

The mandate under Section 128 of the Companies Act of 2013 and Rule 2(A) of the Companies (Accounts) Rules of 2014 is required to be followed by every company. Non-compliance with the mandate pertaining to maintaining a book of accounts of the company will lead to penalties for the person put in charge to ensure compliance with the provisions of Section 128 for the defaulting company. It can be the CEO or CEO, managing director or whole time director. Such person shall be liable to imprisonment, which may extend to a period of one year or penalty, which may extend up to ₹5 Lakhs but shall not be less than ₹50,000 or both.

Conclusion

The MCA notified the Companies (Accounts) Amendment Rules, 2023, on 20 January 2023 to amend the Companies (Accounts) Amendment Rules of 2014. The Companies (Accounts) Amendment Rules, 2023 has amended form number AOC-5 which is attached in the Annexure to the Amendment Rules of 2023. Form AOC-5 deals with details pertaining to the address where the book of accounts is being maintained and which is required to be filed with the Registrar of Companies.

Also Read:
Companies (Authorised To Register) Amendment Rules, 2023

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