Maintenance of Documents in Electronic Form

Maintenance of documents in electronic form is one of the places in the Companies Act, 2013 where the section and the rule pull in opposite directions, and the rule is the one that binds. Section 120 is permissive: documents may be kept, inspected or copied electronically. Rule 27 of the Companies (Management and Administration) Rules, 2014 then makes electronic maintenance compulsory for every listed company and for any company with at least a thousand security holders.

What is maintenance of documents in electronic form under section 120?

Maintenance of documents in electronic form is what section 120 permits, and the section is one sentence in which every limb is permissive. Without prejudice to any other provisions of this Act, any document, record, register, minutes and the like which is:

• (a) required to be kept by a company; or
• (b) allowed to be inspected or copies to be given to any person by a company under the Act,

may be kept or inspected or copies given, as the case may be, in electronic form in such form and manner as may be prescribed.

Two things about that drafting matter. The verb is may, so section 120 by itself confers an option and imposes no duty on anyone. And the form and manner are prescribed, so the section is a delegation: whatever obligation exists lives in the rules, not in the section.

Rule 27 turns the option into an obligation

Rule 27(1) is where the duty appears, and it is a duty rather than a permission:

Every listed company or a company having not less than one thousand shareholders, debenture holders and other security holders, shall maintain its records, as required to be maintained under the Act or rules made thereunder, in electronic form.

So the class the rule binds is defined two ways, and either one is enough:

Note that the thousand is counted across shareholders, debenture holders and other security holders together, not shareholders alone.

The Explanation to rule 27(1) dealt with the changeover: in the case of existing companies, data shall be converted from physical mode to electronic mode within six months from the date of notification of provisions of section 120 of the Act. That is a transitional period keyed to the notification of section 120, so it governed the original conversion rather than the position of a company that crosses the thousand-holder line today.

This is the pattern worth carrying away from section 120. A section that says a thing may be done is not the same as a section that establishes what must be done, and here the compulsion is entirely in the rule. A reader who stops at section 120 will conclude that electronic maintenance is optional for a listed company. It is not.

What the records have to satisfy

Rule 27(2) leaves the manner of maintenance to the Board of directors, "as the Board of directors of the company may think fit", but attaches six provisos. The records must be:

Provisos (e) and (f) look contradictory and are not. (e) freezes a record once it has been dated and signed digitally. (f) requires the register as a whole to remain updatable, with each update dated. So the design the rule contemplates is an append-only history rather than an editable file.

The Explanation to rule 27 defines the subject matter: "records" means any register, index, agreement, memorandum, minutes or any other document required by the Act or the rules to be kept by a company.

Security, inspection, and the copying charge

Rule 28 puts the responsibility on a named person. Under rule 28(1) the Managing Director, Company Secretary, or any other director or officer of the company as the Board may decide shall be responsible for the maintenance and security of electronic records. Rule 28(2) then lists thirteen duties for that person, clauses (a) to (m). Among the ones with teeth: protection against unauthorised access, alteration or tampering; assurance against loss from damage to or failure of the media; records kept in a non-rewriteable and non-erasable format like pdf or another version which cannot be altered or tampered; at least one backup, taken at a periodicity of not exceeding one day, authenticated and dated, kept securely at places the Board decides; access limited to the managing director, company secretary or other director, officer or authorised persons; and records arranged and indexed to permit easy location, access and retrieval.

Rule 29 converts every inspection and copying duty into its electronic equivalent. Where a company maintains its records in electronic form, any duty imposed by the Act or the rules to make those records available for inspection or to provide copies shall be construed as a duty to make them available for inspection in electronic form, or to provide copies containing a clear reproduction of the whole or part of them, on payment of not exceeding ten rupees per page.

That last figure is the operative one for a member who actually wants a copy of a register. It is a ceiling, not a fixed charge.

Rule 30 carries the penalty: on default in compliance, the company and every officer or other person in default shall be punishable with fine which may extend to five thousand rupees, and where the contravention is continuing, a further fine which may extend to five hundred rupees for every day after the first during which it continues.

On the scope of rule 30. In the copy read for this page, rule 30 is a standalone rule headed "Penalty" whose text penalises default "in compliance with any of the provisions of this rule". Rule 30 contains no substantive provisions of its own, so the phrase cannot sensibly refer only to itself. This page reproduces the wording as served rather than resolving the ambiguity, because the reach of the rule is what the ambiguity is about.

On the rules cited here. The rule text on this page comes from the copy of the Companies (Management and Administration) Rules, 2014 that thc.nic.in serves, and that copy is a notification text rather than a consolidation. Its body is the 27 March 2014 notification, unnumbered as served. Bundled into the same file is a later amendment notification, G.S.R. 279(E) dated 6 April 2022, the Companies (Management and Administration) Amendment Rules, 2022, whose own footer records the principal notification as G.S.R. 260(E) dated 31 March 2014 and lists the ten amendments before it. That number and date are second-hand: the file carries them only in that 2022 footer, never on the principal text itself, so the source lines on these pages cite them on the authority of that footer. So the file evidences eleven amendments in all, and the most recent one it carries is the 2022 notification, not the 5 March 2021 one its table ends on. Check the amending notifications before relying on any rule text here for a filing. The section text on this page is the Companies Act, 2013 as consolidated on India Code, with each amendment footnote resolved on its own page.

Why this matters to someone reading a register

Almost everything Flock reports about ownership begins life as a company register. Section 120 and rule 27 are the reason that, for a listed company, those registers exist as electronic records that can be produced in printed form, dated, digitally signed, frozen once signed, and inspected electronically for a capped per-page charge. Rule 29 in particular is the provision a member relies on when asking for a copy of the register of members rather than travelling to the registered office.

Where this sits in the disclosure picture

• What is the register of members covers the principal record rule 27 requires to be kept electronically.
• What is a foreign register of members covers the overseas branch register kept under the same rules.
• What is closure of the register of members covers the period during which that register is not open.
• What are minutes of a general meeting covers one of the records the Explanation to rule 27 names.
• Report on annual general meeting, section 121 covers a document the same rule set governs, filed rather than merely kept.
• What is in the annual return, section 92 covers the annual filing assembled out of these registers.

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.