• Mayank Upadhyay

Section 338 Of The Companies Act 2013

Updated: Jun 23


Introduction

Maintenance of Books of Accounts is one of the mandatory compliances that every company needs to follow. It is crucial to keep the records so that one can get a true and accurate view of the company's state of affairs or branch office. Furthermore, maintaining the books of accounts was made by the company. Besides, it also specifies the period for which the company has kept the record and the place of keeping.

A specific period for the maintenance of the Company's Book Of Account. They are as follows:

  1. Every company shall keep the books of account in good order relating to a period which must not be less than eight financial year immediately preceding a Financial Year, or

  2. In case, the existence of company counts for less than eight years, then also it is supposed to maintain the books of account and all the relevant vouchers in good order in respect of all the preceding years together.

  3. If there's an order for investigation in respect of the company under Chapter XIV, the company will be directed by the Central Government to keep the books of accounts for such long period as it may be deemed fit.

Provisions under Section 338 of Companies Act, 2013


[Liability Where Proper Accounts Not Kept]

  1. Where a company is being wound up, if it is shown proper books of account were not kept by the company throughout the period of two years immediately preceding the commencement of the winding up, or the period between incorporation of the company and the commencement o the winding up, whichever is shorter, every officer of the company who is in default shall, unless he shows that he acted honestly and that in the circumstances in which the business of the company was carried on, the default was excusable, be punishable with imprisonment for a term which shall not be less than one year but which may extend to three years and with fine which shall not be less than one lakh rupees but may extend to three lakh rupees.

  2. For the purpose of sub-section (1), it shall be deemed that proper books of account have not been kept in the case of any company-

(a) if such books of account as are necessary to exhibit and explain the transactions and financial position of the business of the company, including books containing entries made from day-to-day in sufficient detail of all cash received and all cash paid, have not been kept; and

(b) where the business of the company has involved dealings in goods, statements if the annual stock takings and, except in the case of good sold by way of ordinary retail trade, of all goods sold and purchased, showing the goods and the buyers and the sellers thereof in sufficient detail to enable those goods and those buyers and sellers to be identified, have not been kept.



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