Company Books as Evidence in Winding Up: S. 345

Company books as evidence in winding up is a one sentence rule that decides who has to prove what. Section 345 of the Companies Act, 2013 makes the books and papers of a company being wound up, and those of the Company Liquidator, prima facie evidence of the matters recorded in them as between the contributories. It is short, it is unamended, and its two limiting phrases do most of the work.

What does section 345 say about company books as evidence in winding up?

The whole section is one sentence: Where a company is being wound up, all books and papers of the company and of the Company Liquidator shall, as between the contributories of the company, be prima facie evidence of the truth of all matters purporting to be recorded therein.

Four elements sit in it. The trigger is that the company is being wound up. The subject is all books and papers of two holders. The parties are the contributories. The effect is prima facie evidence of the truth of what the records purport to say.

Whose books, and between whom?

Two sets of records, one set of parties. The section covers books and papers of the company and of the Company Liquidator, which puts pre-appointment records and the liquidator's own records on the same footing. That matters because much of the material a contributory would want to rely on is created after the winding up begins, by the Company Liquidator exercising the section 290 powers.

The parties are narrower than the records. The presumption runs as between the contributories of the company, so it is drafted for disputes among the persons who appear on the list of contributories, not as a general rule of proof binding creditors or third parties. Section 345 says nothing about how the books stand against anyone outside that class.

How strong is a prima facie presumption here?

It is a starting point, not a conclusion. Section 345 uses prima facie evidence, not conclusive evidence, and the object of the presumption is carefully worded: the truth of all matters purporting to be recorded therein. The word purporting attaches the presumption to what the record appears to say, which leaves room for a contributory to show that what it says is wrong.

Nothing in the section requires the books to be audited, complete or contemporaneous before the presumption attaches. A separate provision, section 348(1), requires a periodic statement in a pending liquidation to be duly audited, by a person qualified to act as auditor of the company, which is the only audit requirement of that kind in this group of sections.

Has section 345 been amended?

No. Section 345 is printed without square brackets and carries no footnote marker, so it stands as enacted in 2013. The three footnotes printed at the foot of that page attach to the sections before it, including the substitution of section 343(1) by Act 31 of 2016, section 255 and the Eleventh Schedule with effect from 15 November 2016.

Section 345 answers a question of proof, and it does not answer a question of access. Whether a contributory can get at the books in the first place is governed by section 346, covered in inspecting company books in a winding up, and how long those books survive is governed by section 347, covered in the disposal of company books. Company books as evidence in winding up only settles what the books mean once you have them.

Flock reports the filings themselves, each stamped with its date and linked back to the exchange or regulator that published it. What any of it means for you is your call to make.