{"id":6652,"date":"2020-04-13T15:30:01","date_gmt":"2020-04-13T10:00:01","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=6652"},"modified":"2022-11-16T14:24:21","modified_gmt":"2022-11-16T08:54:21","slug":"maintenance-and-inspection-of-documents-in-electronic-form","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/maintenance-and-inspection-of-documents-in-electronic-form\/","title":{"rendered":"Maintenance and Inspection of Documents in Electronic Form"},"content":{"rendered":"\n<p class=\"has-drop-cap\">In India, mandatory provision was inserted under the Companies Act, 2013, which requires every <a href=\"https:\/\/corpbiz.io\/company-registration\"><strong>registered company<\/strong><\/a> to maintain statutory records of company in form of books of account, records, minutes etc. In erstwhile companies Act, companies were required to maintain physical copies of its financial records. But with the Companies (Amendment) Act, 2006 emphasis was given to electronic filing of documents. But still, there was major missing about methodology in order to maintain electronic documents. With the inception of<strong><em> the Companies act 2013<\/em><\/strong><sup><a class=\"text-primary\" href=\"https:\/\/www.mca.gov.in\/content\/mca\/global\/en\/acts-rules\/companies-act\/companies-act-2013.html\"><strong>[1]<\/strong><\/a><\/sup>, specific provisions were provided in order to define records in electronic forms<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/maintenance-and-inspection-of-documents-in-electronic-form\/#Where_provisions_wrt_Maintenance_and_inspection_of_electronic_documents_are_defined\" >Where\nprovisions w.r.t. Maintenance and inspection of electronic documents are\ndefined?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/maintenance-and-inspection-of-documents-in-electronic-form\/#What_is_the_definition_of_records\" >What\nis the definition of records?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/maintenance-and-inspection-of-documents-in-electronic-form\/#Does_this_maintenance_in_electronic_form_is_applicable_for_all_companies\" >Does\nthis maintenance in electronic form is applicable for all companies?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/maintenance-and-inspection-of-documents-in-electronic-form\/#What_points_need_to_take_care_while_maintaining_electronic_records\" >What\npoints need to take care while maintaining electronic records?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/corpbiz.io\/learning\/maintenance-and-inspection-of-documents-in-electronic-form\/#Who_is_responsible_for_maintenance_of_such_records_in_electronic_form\" >Who\nis responsible for maintenance of such records in electronic form?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/corpbiz.io\/learning\/maintenance-and-inspection-of-documents-in-electronic-form\/#What_are_the_various_responsibilities_of_the_person_authorized_with_such_powers\" >What are the various responsibilities of the\nperson authorized with such powers?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/corpbiz.io\/learning\/maintenance-and-inspection-of-documents-in-electronic-form\/#Provisions_regarding_maintenance_and_inspection_of_records_in_electronic_form\" >Provisions regarding maintenance and inspection of\nrecords in electronic form<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/corpbiz.io\/learning\/maintenance-and-inspection-of-documents-in-electronic-form\/#Penalty_in_case_of_Non-Compliance\" >Penalty in case of Non-Compliance<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/corpbiz.io\/learning\/maintenance-and-inspection-of-documents-in-electronic-form\/#Conclusion\" >Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Where_provisions_wrt_Maintenance_and_inspection_of_electronic_documents_are_defined\"><\/span>Where\nprovisions w.r.t. Maintenance and inspection of electronic documents are\ndefined?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Even in\nerstwhile companies Act, there was a reference of maintenance of records in\nelectronic form, but clear picture was given under the Companies Act, 2013\nunder Section 120 of the companies act, 2013. Section 120 has been defined as: <\/p>\n\n\n\n<p><em>\u201c<\/em><em>120.<\/em><em>&nbsp;Without prejudice to any other provisions of this Act, any\ndocument, record, register, minutes,<\/em> etc.,\u2014<\/p>\n\n\n\n<p><em>(a) required to be kept\nby a company; or<\/em><\/p>\n\n\n\n<p><em>(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 were given, as the case may be, in electronic form in such form and manner as may be prescribed.\u201d<\/em><\/p>\n\n\n\n<p>So as per the\nsaid section, companies are required to maintain the records of company in\nelectronic form and further allow inspection or give copies of the same as per\nprescribed manner. Further, certain guidelines also have been provided under\nthe <strong>Companies (Management and Administration) Rules of 2014<\/strong>&nbsp;for\npreservation and inspection of records in electronic form.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_the_definition_of_records\"><\/span>What\nis the definition of records?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Here term \u2018Records\u2019 comprises of\nany \u2018Books &amp; Papers\u2019 or \u2018Documents\u2019 as defined under section 2(12) and\nsection 2(36) of the companies act, 2013 respectively. Further, the term \u2018Records\u2019\ncan be defined as registers, minutes, records, indexes, memorandum, agreements\nor any other documents as required by companies act to be maintained by a\ncompany as defined under Rule 27 of the Companies (Management\nand Administration) Rules of 2014.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Does_this_maintenance_in_electronic_form_is_applicable_for_all_companies\"><\/span>Does\nthis maintenance in electronic form is applicable for all companies?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Maintenance of records in\nelectronic form is a mandatory provision for all listed companies and for\ncompanies which have shareholders, debenture holders or security holder\u2019s\nnumber not less than One Thousand (1000). These companies are required to\nmaintain records as per prescribed rules and guidelines prescribed for\nmaintenance of electronic records. For other companies, it is an optional\nprovision. <\/p>\n\n\n\n<p>And any existing company was\nrequired to convert the data from physical form to electronic form within a\ntime period of 6 months as per prescribed guidelines, i.e. on or before\n01.10.2014.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_points_need_to_take_care_while_maintaining_electronic_records\"><\/span>What\npoints need to take care while maintaining electronic records?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Physical, as well as electronic records, are to be maintained by companies as directors or other key personnel&#8217;s of the company may deem fit. But certain pointed need to take care while maintaining, such as:<\/p>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" width=\"595\" height=\"336\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/04\/image-41.png\" alt=\"maintaining electronic records\" class=\"wp-image-6655\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/04\/image-41.png 595w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/04\/image-41-300x169.png 300w\" sizes=\"(max-width: 595px) 100vw, 595px\" \/><\/figure>\n\n\n\n<ul><li>Companies\nare required to maintain records as per guidelines and formats prescribed under\nthe companies act or rules prescribed. Certain guidelines, as prescribed under\nthe IT Act, 2000 also need to be followed while maintaining records.<\/li><li>All\nthe information to be recorded in such a way so that it can also be referred\nfor future purpose. It needs to be in such form and in line with section 4 of\nthe IT act, 2000 so that in case required can be present before court of law as\nevidence.<\/li><li>All\nthe information must be in readable form and in case required can be retrieved\nand reproduce in physical form too.<\/li><li>All\nthe records should be dated and digitally signed wherever it is required.\nCompanies Act has not prescribed any specific guidelines w.r.t. to digital\nsignature, so in this case, section 15 of the IT act, 2000 can be referred.<\/li><li>All\nthe records need to be in such form so that can be updated in case require.\nDate of updating need to be mentioned in such case and guidelines w.r.t. Rule\n27(2)(f) of the Companies (Management and Administration) Rules of 2014 to be\nfollowed.<\/li><li>Once statutory records are dated and\ndigitally signed, it should not be altered or edited. This is in order to avoid\nany alteration in information.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Who_is_responsible_for_maintenance_of_such_records_in_electronic_form\"><\/span>Who\nis responsible for maintenance of such records in electronic form?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Any person who is authorized by board of director can be given the responsibility of maintaining such records.<\/p>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" width=\"576\" height=\"339\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/04\/image-39.png\" alt=\"\" class=\"wp-image-6653\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/04\/image-39.png 576w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/04\/image-39-300x177.png 300w\" sizes=\"(max-width: 576px) 100vw, 576px\" \/><\/figure>\n\n\n\n<p>That\nauthorized person as chosen by board of directors is required to maintain such\nrecords as per provisions given under Rule 28 the\n<strong>Companies (Management and\nAdministration) Rules of 2014. Many guidelines have been imposed that\nauthorized person needs to maintain in order to ensure the security of such\nrecords. Any one person from board of directors such as Managing director or\nany other officer of the company or company secretary of the company can be\nauthorized to maintain such records as per<\/strong> Rule 28 the <strong>Companies\n(Management and Administration) Rules of 2014. The main intention behind this\nis to ensure only limited persons have the authorization to do alteration in\nrecords of company in order to maintain transparency.<\/strong><strong><\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_are_the_various_responsibilities_of_the_person_authorized_with_such_powers\"><\/span>What are the various responsibilities of the\nperson authorized with such powers?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong>Such person as authorized by board of directors has below-mentioned responsibilities: <\/strong><\/p>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" width=\"581\" height=\"336\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/04\/image-40.png\" alt=\"\" class=\"wp-image-6654\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/04\/image-40.png 581w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/04\/image-40-300x173.png 300w\" sizes=\"(max-width: 581px) 100vw, 581px\" \/><\/figure>\n\n\n\n<ul><li>To\nprotect record from any unauthorized access or any kind of tampering or\nalteration<\/li><li>To\nensure proper maintenance of records in case of damage etc <\/li><li>Ensure\nsecurity of computer, system, any software etc. for accuracy and reliability of\nthe records<\/li><li>To\nensure that authorized signatory of records does not repudiate the signed\nrecords as not to be genuine<\/li><li>ensure&nbsp;<em>against\nloss of the records as a result of damage<\/em>&nbsp;to, or&nbsp;<em>failure of\nthe media<\/em>&nbsp;on which the records are maintained;<\/li><li>To\ndetect in case of any unauthorized alteration is made in records<\/li><li>Proper\nupdation of data timely along with mention of the date of updation<\/li><li>TO\nensure the reproduction of records in future in such a way so that it can be\nproduced legally in future in case required<\/li><li>To\nkeep data in the form of PDF or other such versions to ensure that it is\nnon-editable or non-erasable.<\/li><li>Ensure\nbackup of such data and compliance with various rules and guidelines prescribed\nas per Rule 27 of MG rules 2014 and IT Act, 2000.<\/li><li>Arrange\nand indexing of data in such form so that can be retrieved easily in case\nrequired<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Provisions_regarding_maintenance_and_inspection_of_records_in_electronic_form\"><\/span>Provisions regarding maintenance and inspection of\nrecords in electronic form<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Every\ncompany maintains electronic records of data have duty to maintain data in such\nform so that:<\/p>\n\n\n\n<ul><li>Any person who wants to access such\ninformation about company can do that<\/li><li>To provide copies of such records in whole\nor partly available for inspection at a nominal rate<\/li><\/ul>\n\n\n\n<p>Such provisions\nhave been given under the Companies (Management &amp; Administration) Rules,\n2014 for inspection and taking extract of such records. As per that any person\ncan do online inspection of records of company or get such records as required\non payment of the prescribed nominal fee that should not exceed Rs. 10 per\npage.&nbsp; <\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Penalty_in_case_of_Non-Compliance\"><\/span>Penalty in case of Non-Compliance<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>In case a company or its authorized person fails to comply\nwith such provisions w.r.t. Maintenance and inspection of documents in\nelectronic form then, in such scenario such company or authorized person can be\npenalized for amount up to Rs. 5000. In case of continuing default Rs. 500 per\nday can be imposed.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>However, certain provisions were provided under erstwhile companies act, 1956 and amendments under the same but the new company\u2019s Act of 2013 have provided statutory provisions to maintain records in electronic form. Although only listed companies are under obligation to maintain electronic records but other companies which have voluntarily resolve to maintain such records need to comply with Rule 27 and Rule 28 of MGT Rules of 2014 along with IT act 2000. Even penal provisions have been made for companies which fail to follow guidelines and provisions made by regulator or central government. Maintaining electronic record plays an important role in order to maintain transparency and corporate governance. So all companies should follow the said provisions. <\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/quorum-for-board-meeting-in-regards-to-companies-act-2013\/\">What is Quorum For Board Meeting in Regards to Companies Act, 2013?<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>In India, mandatory provision was inserted under the Companies Act, 2013, which requires every registered company to maintain statutory records of company in form of books of account, records, minutes etc. In erstwhile companies Act, companies were required to maintain physical copies of its financial records. But with the Companies (Amendment) Act, 2006 emphasis was [&hellip;]<\/p>\n","protected":false},"author":21,"featured_media":6656,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[120,340],"tags":[481],"acf":{"service_id":"321"},"authorName":"Navdeep Kaur","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/03\/IMG_20190122_114933.jpg","authorDescription":"Navdeep is working as legal counsel in Enterslice group companies having more than 4 years of experience. She has expertise in legal, corporate and regulatory matters.","postViews":8958,"readingTime":5,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/6652"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/21"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=6652"}],"version-history":[{"count":12,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/6652\/revisions"}],"predecessor-version":[{"id":50742,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/6652\/revisions\/50742"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/6656"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=6652"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=6652"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=6652"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}