New Amendment regarding Maintenance of Accounts and Books in Electronic Mode

25th August 2022  

Ministry of Corporate Affairs (MCA) vide a notification dated 5^th August 2022 has amended Rule 3 of Companies (Accounts) Rules, 2014, relevant for companies maintaining their accounts and other books and papers in electronic mode. The summary of the amendment is provided as under:

1.    Accounts and other books and papers shall remain accessible in India at all times: Prior to this change, Companies were required to ensure that the accounts and other books and papers are accessible in India so that they can be made available to stakeholders as and when required, however, post this amendment, it shall be maintained at all times. Accordingly, the loss of accessibility even for a brief amount of time will be categorized as a non-compliance and no company can decline access to authorities on the pretext that data is accessible otherwise but not accessible at a particular point in time.

2.    Back-up of Accounts on servers located in India on daily basis: The accounts and other books and papers of the Company maintained electronically, whether in India or outside India shall be backed up on servers physically located in India on daily basis. Earlier, such backup had to be taken on a “periodic basis”, with the provisions being silent on the length of the period.

3.    Details to be provided in case if service provider is located outside India: Sub-rule 6 to Rule 3 has been added stating that in case the service provider of Record keeping through Electronic Mode is located outside India, the company shall intimate the name and address of the person who is in control of such accounts and other Books and Papers in India to the Registrar on an annual basis at the time of filing of financial statement.   

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Saajan Thakkar

Consultant | VCFO | [email protected]

Supports fund services with a focus on transaction processing, reconciliations, and performance reporting. Brings strong FP&A and operational finance expertise to streamline fund accounting and expense management.