Companies (Accounts) Fourth Amendment Rules, 2022: Companies’ Bookkeeping Rules tightened by MCA

As per the MCA notification dated 05th August 2022 Government has notified the Companies (Accounts) Fourth Amendment Rules, 2022. As per the amended rules back-up of the books of account/other books & papers maintained in electronic mode, including at a place outside India, shall be kept in servers physically located in India on a ‘daily basis’ replacing the earlier ‘periodic basis’.

Provisions with Amendments in Companies (Accounts) Rules, 2014 and their impact:

• The books of account and other relevant books and papers maintained in electronic mode shall remain accessible in India, at all times so as to be usable for subsequent reference (earlier there was no requirement of making it accessible at all times)
• Our Comment: One can opine that according to the amendment books of account and books and papers if maintained in electronic mode should be available in India all the time.
• There shall be a proper system for storage, retrieval, display or printout of the electronic records as the Audit Committee, if any, or the Board may deem appropriate and such records shall not be disposed of or rendered unusable, unless permitted by law. Provided that the back-up of the books of account and other books and papers of the company maintained in electronic mode, including at a place outside India, if any, shall be kept in servers physically located in India on a daily basis (earlier periodic basis)
• The company shall intimate to the Registrar on an annual basis at the time of filing of financial statement-

• the name of the service provider;
• the internet protocol address of service provider;
• the location of the service provider (wherever applicable);
• where the books of account and other books and papers are maintained on cloud, such
• address as provided by the service provider.
• where the service provider is located outside India, the name and address of the person in control of the books of account and other books and papers in India.

Our Comment: One can opine that, according to this amendment Companies are required to give
details in AOC-4 of person authorized in India for control of books of account and other books of
papers maintained in electronic mode.

Corporates in India, especially multinational outfits operating here can no longer decline real time access
of their account books to government authorities because they are maintained in electronic mode under
a “cloud” infrastructure with servers located outside India. The daily backups would have to be
maintained in servers physically located in India.

Disha Gupta, Audit Associate, SW India