Companies Act Section 17

Companies Act Section 17: Provision of Copies of Memorandum, Articles, and Other Documents to Members

1. Obligation to Provide Documents to Members

Section 17 of the Companies Act establishes the right of company members to receive copies of important corporate documents upon request. 

The company's duty is to provide these documents in a timely manner and under specific conditions. 

This provision ensures transparency and accessibility of key corporate information for all members, reinforcing their rights to be informed about the company’s constitution and governance framework.

Request for Documents by Members

Members of a company, whether shareholders or otherwise entitled individuals, have the legal right to request access to certain fundamental documents that govern the company's structure and operation. 

These documents include the following:

1. The Memorandum of Association (MoA):

The Memorandum of Association is a foundational document that defines the legal identity and scope of activities of the company. 

It outlines crucial information such as:

The company's name.

The objectives or purposes for which the company is established.

The powers of the company in pursuing its objectives.

The share capital structure, if applicable.

The liability of members, whether limited or unlimited.   

Since the Memorandum acts as the company’s constitution, it is essential for members to have access to this document to understand the legal framework within which the company operates.

2. The Articles of Association (AoA):

The Articles of Association contain the rules and regulations that govern the internal management of the company. 

It outlines how the company’s affairs will be conducted, specifying:

The rights and obligations of members.

The roles and duties of directors.

The procedures for appointing officers, holding meetings, and managing shareholder interests.   

By requesting a copy of the Articles, members can gain insight into the internal mechanisms that drive decision-making within the company and ensure that these rules are in compliance with both statutory requirements and member expectations.

3. Agreements and Resolutions:

In addition to the Memorandum and Articles, members are entitled to receive copies of specific agreements and resolutions that affect the company. 

These include documents mentioned in Section 117(1), such as:

Formal agreements that the company has entered into, especially those affecting its governance.

Resolutions passed by the company that are not part of the Memorandum or Articles, but which may impact the company's structure, decision-making, or direction.   

These documents often reflect key decisions made by the board or shareholders, which could have significant implications for the company’s future operations or strategy.

Timeline and Fees for Document Provision

Upon receiving a request from a member for any of the above documents, the company is required to act within seven days. 

This means that the company must send the requested copies to the member promptly, ensuring that the member receives the documents within the stipulated time frame. 

Payment of Fees: 

The company can charge a fee for providing copies of these documents. 

The amount of the fee must comply with the prescribed rules or regulations as set forth by the relevant authority. 

Members are expected to remit this fee as a condition for receiving the requested copies, but the fee should be reasonable and set in accordance with applicable guidelines.

This provision guarantees that members can stay informed about the company’s governing documents without unreasonable delays or obstructions.

2. Penalties for Non-Compliance

To ensure adherence to the requirements laid out in Section 17, the Act provides for penalties if the company fails to comply with a member's request for copies of the Memorandum, Articles, or other documents within the stipulated seven-day period.

Non-Compliance by the Company and Officers

If the company fails to provide the requested documents within the required timeframe, both the company and the officers responsible for ensuring compliance will face penalties. 

This liability extends to every officer in default, holding those individuals accountable for their failure to act.

Penalties Imposed: 

In cases of non-compliance, the following penalties apply:

The company and every officer in default will be subject to a fine of one thousand rupees for each day during which the default continues. 

This daily penalty accumulates for as long as the company fails to fulfill its obligation to provide the documents.   

This daily fine acts as a financial deterrent, encouraging prompt action by the company to avoid unnecessary delays in supplying the requested documents.

Cap on Maximum Penalty

While the daily penalty increases the financial burden on non-compliant companies and officers, the Act also places a cap on the total penalty that can be imposed. The maximum penalty is one lakh rupees.

Total Liability: 

Regardless of how long the default continues, the total fine imposed cannot exceed this cap of one lakh rupees. 

This ensures that the penalties remain proportional to the nature of the default, while still serving as an effective deterrent against prolonged non-compliance.