Companies Act Section 94

Companies Act, Section 94: Place of Keeping and Inspection of Registers, Returns, etc.

Section 94 of the Companies Act provides the legal framework for the maintenance, accessibility, and inspection of key company records, including registers and returns. The primary purpose of this provision is to ensure transparency in corporate operations by allowing stakeholders, such as members, debenture holders, and regulatory authorities, to access important corporate records. This section also specifies where these records must be kept, under what conditions they can be inspected, and the penalties for non-compliance.

Subsection (1): Place of Keeping Registers and Returns

Registered Office as the Default Location

Companies are required to maintain their registers, including the register of members under Section 88, and copies of their annual returns filed under Section 92 at their registered office.

This ensures that important corporate records are kept at a centralized and easily accessible location.

Alternative Location for Keeping Registers

A company may opt to maintain these registers and returns at a location other than its registered office, provided that:

More than one-tenth of the total number of company members, as recorded in the register, reside in the alternative location.

The decision to maintain records at an alternative location is approved by a special resolution passed at a general meeting of the company.

This provision provides flexibility while ensuring that the records remain accessible to a significant number of stakeholders.

Prescribed Period for Record Keeping

The Central Government or relevant regulatory authorities prescribe the duration for which these records must be maintained.

Companies are required to comply with these timeframes to ensure adherence to statutory record-keeping requirements.

Subsection (2): Inspection of Registers and Returns

Access to Registers and Returns

The registers, their indices, and copies of all filed returns must be made available for inspection during business hours.

Inspection rights are extended to:

Members

Debenture holders

Other security holders

Beneficial owners

These stakeholders have the right to inspect the records without paying any fees.

Access for Other Persons

Individuals who are not members, debenture holders, security holders, or beneficial owners may also inspect these records, but the company may charge a prescribed fee for such access.

This provision ensures that transparency is maintained while allowing companies to recover administrative costs.

Subsection (3): Extracts and Copies of Registers and Returns

Taking Extracts Without Fee

Any member, debenture holder, security holder, or beneficial owner is entitled to:

Take extracts from any register, index, or return without incurring any fees.

This ensures ease of access to important company information for stakeholders.

Requesting Copies for a Fee

Any person can request copies of any register or return by paying a prescribed fee.

The fee structure is determined by the regulatory authorities to ensure consistency and fairness.

Limitations on Certain Data

Certain details within the registers, indices, or returns may be restricted from public access.

The Central Government prescribes which details may be withheld to balance transparency with confidentiality.

Subsection (4): Penalty for Refusal of Inspection or Extracts

Failure to Allow Inspection or Provide Copies

If a company refuses to allow inspection or denies providing requested extracts/copies, it is considered a violation of this section.

Penalty Details

Companies and every officer in default are subject to penalties as follows:

A fine of ?1,000 per day of continued refusal or non-compliance.

The maximum penalty is capped at ?1,00,000.

These penalties serve as a deterrent against non-compliance and ensure that stakeholders’ rights are protected.

Subsection (5): Direction for Immediate Inspection by Central Government

Government’s Authority to Order Inspection

The Central Government has the power to order an immediate inspection of the company’s records if it deems it necessary.

If a person is denied access to extracts or copies of records, the government can issue directions ensuring immediate compliance.

Purpose and Importance of Section 94

1. Transparency and Accountability

This section promotes corporate transparency by making essential records available for inspection.

Ensures that companies are accountable to their members, investors, and regulatory bodies.

2. Ease of Access

By providing access to registers and returns, Section 94 ensures that stakeholders have necessary information to make informed decisions regarding the company.

The ability to take extracts and obtain copies enhances accessibility.

3. Legal Protection

Imposing penalties on non-compliant companies protects the rights of stakeholders.

Ensures that companies adhere to disclosure standards and do not unjustly restrict access to corporate records.