[Case Study] Consequences of non-maintenance of updated Register of Members
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- Last Updated on 22 November, 2022
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[2022] 145 taxmann.com 82 (Article)
1. Maintenance of statutory registers by a company
Every company incorporated under the Companies Act 2013, is required to keep and maintain certain specified statutory registers pursuant to section 88 of the Companies Act 2013, in such form and in such manner as prescribed under rule 3 and 4 of the Companies (Management and Administration) Rules 2014.
One of the specified register under the provisions of the Companies Act 2013 is that of Register of Members which is required, separately for each class of equity and preference shares in the specified form MGT-1.
2. Place of maintenance of the statutory registers
According to sub-rule (2) of rule 5 of the Companies (Management and Administration) Rules 2014, the registers are required to be maintained at the registered office of the company.
However, by passing a special resolution, as per proviso to section 128(1) of the Companies Act 2013, the company may keep the books of accounts at any other place within the city, town or village in which the registered office is situated or any other place in India in which more than one-tenth of the total members entered in the register of members reside. Hence, for maintaining the books of accounts at any place other than registered office, approval of members is required and the company is also required to intimate with the Registrar of Companies giving the full address of that other place where the books of accounts are maintained within seven days of the resolution passed by the members.
3. Relevant provision pertaining to maintenance of Register of Members under Companies Act 2013
As per the provisions of section 88 of the Companies Act 2013:-
| Section | Requirement |
| 88 (1) | Every company shall keep and maintain the following registers in such form and in such manner as may be prescribed, namely; |
| 88(1) (a) | Register of members indicating separately for each class of equity and preference shares held by each member residing in or outside India. |
| 88 (2) | Every register maintained under sub-section (1) shall include an index of the names included therein. |
4. Specified form for maintenance of Register of Members
Rule 3 (1) of Companies (Management and Administration) Rules 2014 specifies that every company limited by shares shall from the date of its registration, maintain a register of its members in form no. MGT-1
As per the proviso to the rule (3) that in the case of a company existing on the commencement of the Companies Act 2013, the particulars as available in the register of members maintained under the earlier Companies Act 1956, shall be required to be transferred to the new register of members in form no. MGT-1 and in case additional information required as per provisions of the Companies Act 2013 and these rules, is provided by the members, such information may also be added in the register as and when provided.
5. Penal provisions for non-compliance/default
As per sub-section (5) of section 88 of Companies Act 2013, if a company does not maintain a register of members or debenture-holders or other security holders or fails to maintain them in accordance with the provisions of sub-section (1) or sub-section (2), the company shall be liable to a penalty of three lakh rupees and every officer of the company who is in default shall be liable to a penalty of fifty thousand.
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