This article has been written by Ms khushi sarkhedi a 1-year BA LLB student from AURO university.
Section 120 of the Companies Act 2013 and Companies (Management and Administration) Regulations 2014 deals with the maintenance and verification of documents in electronic form. All documents, records, registers, logs, etc. (a) must be retained by the Company; or (b) a copy retained or inspected in electronic form or authorized by an entity under this Act for inspection or distribution of a given copy.
Keeping records in electronic form is mandatory for all listed companies and for companies with a number of shareholders, bondholders or securities holders of not less than one thousand (1000). . These companies are required to maintain records according to regulatory rules and regulatory guidelines for maintaining electronic records. For other companies, this is an optional provision.And any existing business is required to convert data from physical to electronic form within 6 months according to regulatory guidelines.
Maintenance of record in electronic form :
- Records in electronic form will be maintained in such a manner as may be deemed appropriate by the company’s management.
- Records shall be maintained in the same format and in accordance with any other requirements imposed by law or the rules set forth therein.
- Information requested under the provisions of the Act or the rules made therein shall be fully documented for future reference; records must be readable, retrievable and reproducible in print.
- Records may be dated and digitally signed whenever required under the provisions of the Act or the rules made therein.
- records, once dated and digitally signed, may not be altered or modified.
- The registers must be able to be updated, in accordance with the provisions of the Act or rules enacted under that Act, and the date of the update must be able to be entered on each update.
Who is responsible for maintaining such record:
Any person authorized by the board of directors may be assigned the responsibility of maintaining these registers.
Such authorized person, selected by the board of directors, must maintain such records in accordance with the provisions of Rule 28 of the Company Code (Management and Executive) 2014. There are many guidelines that are imposed. that the authorized person must keep to ensure the confidentiality of such records. Any person on the board such as the chief executive officer or any other officer of the company or the company secretary may be authorized to keep such records in accordance with Rule 28 of the Company Rules. (Management and Operations) 2014. The main purpose behind this is to ensure that only limited people are allowed to modify the company’s records to maintain transparency.
Security of records maintained in electronic form:
Responsibility for the maintenance and confidentiality of records maintained in Electronic form has been sent to the executive director, company secretary or a director or other officer of the company as the Board of Directors may decide. Because for the purpose of holding any other person liable, the attorney resolution should be passed to that effect.
Such responsible person has been charged under Rule 28(2) with the following functions:
- a) Provide adequate protection against unauthorized access, modification or forged records.
(b) To insure against loss of records due to damage or failure of record keeping facilities.
(c) To ensure that the person signing the electronic record does not refuse unauthenticated signed minutes.
- d) To ensure that computer systems, software and hardware are are fully secured and verified to ensure their accuracy, reliability and consistent predictive performance.
- e) To ensure that computer systems can distinguish invalid and damaged record.
- f) To ensure that records are accurate, accessible and capable copy for further reference;
- g) Ensure that records can be retrieved at any time to an easy-to-read and printable form.
- h) To ensure that records are kept in a non-rewritable and indelible format Format as pdf or other version can not edit or doctor.
- i) Make sure that at least one backup, done with a frequency of zero for more than one day, up-to-date records are kept in electronic form, each backup is authenticated and dated, and these backups must be securely stored at locations determined by the Board of Directors.
- j) Restrict access to archives to executives, companies secretary or any other director or officer or persons performing the work of company as authorized by the board of directors for this purpose.
- k) Ensure that any copies of original non-electronic documents in electronic forms are complete, authentic, honest and easy to read when retrieving.
- l) Classifying and indexing documents to facilitate their locating, access and retrieve any particular records.
- m) Take the necessary measures to ensure safety, integrity and confidentiality of recordings.
Punishment and complicity :
Violation of Terms:
This does not provide for any penalty provisions in case of violation of the title. Therefore, section 450 of the Act will apply. Therefore, the penalty for the violation, the company and any If the company director is absent, will he be fined? up to R. 10,000, for repeated violations, then fine will be Rs 1,000 for each day of violation .
Not following the rules:
According to Rule 30 of the Company Code (Management and Executive), 2014 violates the rules established under this section, the company and any violating company employees are punished with a fine of up to Rs.5,000, in case of subsequent violations fine will be 500 rupees for each day of violation. Offenses under this section and the rule may be aggravated under section 441 of the Act.
Penalty :
| Company & officer or such person | Fine which may extend to 5000/- |
| Continuing contravention | Fine which may extend to 500/- every day |
- All listed companies and other regulated companies must convert their records from physical mode to electronic mode no later than October 1, 2014.
- E-governance was introduced in the Companies Act 2013 to maintain and audit statutory company records.
- We need the right software to digitally sign the records, which must be safe and secure to use.
- The company needs to find a reliable software tool in the market and invest in it, which will increase maintenance costs.
Penalty In Case Of Non-Compliance:
In the event that a company or its designee fails to comply with these regulations w.r.t. The maintenance and inspection of documents in electronic form, in such case, the company or its authorized person may be fined up to Rs. 5000. In case of repeated violations, 500 R. per day can be applied.
Conclusion :
In any case, certain arrangements were given beneath past companies act, 1956 and corrections beneath the same but the modern company’s Act of 2013 have given statutory arrangements to preserve records in electronic shape. In spite of the fact that as it were recorded companies are beneath commitment to preserve electronic records but other companies which have deliberately resolve to preserve such records got to comply with Run the show 27 and Run the show 28 of MGT Rules of 2014 in conjunction with IT act 2000. Even correctional arrangements have been made for companies which fall flat to take after rules and arrangements made by controller or central government. Keeping up electronic record plays an critical part in arrange to preserve straightforwardness and corporate administration. So all companies ought to take after the said arrangements.
Citation :
Aishwarya Says:
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