Statutory Registers in Corporate Governance: Ensuring Transparency and Compliance

Introduction

Essential details about a corporation, including its members, directors, and charges, are recorded in statutory registers. According to the Companies Act of 2013, the following statutory registers must be maintained by a company:

  1. Designated Keeper: A reliable individual must be appointed to ensure the statutory registers are kept up to date.
  2. Access for Members: The registers must be available for inspection by the company’s members and debenture holders.
  3. Registrar Access: The registers must be submitted to the registrar of companies upon request.
  4. Format Specification: The Companies Act outlines the specific format for these statutory registers.
  5. Retention Period: Companies are required to preserve the statutory registers for eight years following the last entry.
  6. Accessibility: Statutory registers should be accessible to members and other stakeholders from the onset.

The statutory registers a company is required to maintain include

  • Register of Members (MGT-1): Contains the names, addresses, and shareholdings of the company’s members.
  • Register of Debenture Holders (MGT-2): Lists the names, addresses, and debenture holdings of the company’s debenture holders.
  • Register of Directors and Key Managerial Personnel (MGT-7): Includes names, addresses, and other relevant details about the company’s directors and key managerial personnel.
  • Charges Register (CHG-7): Documents all charges against the company’s assets.
  • Register of Renewed and Duplicate Share Certificates (SH-2): Records information about all duplicate and renewed share certificates issued by the company.
  • Register of Sweat Equity Shares (SH-3): Lists all sweat equity shares ever issued by the company.
  • Registers of Shares/Other Securities Bought Back (SH-10): Documents all shares and other securities repurchased by the company.
  • Loans and Guarantees Record: Includes information on all loans and guarantees provided by the company.
  • Register of Foreign Members: Contains details of members residing outside India.
  • Loan/Security/Guarantee Acquisition Register (MBP-2): Lists all loans, guarantees, and securities acquired by the company.
  • Register of Non-Company Held Registers (MBP-3): Contains details about all registers not held in the company’s name.
  • Registry of Contracts and Agreements Involving Directors: Lists all contracts and agreements in which the company’s directors have an interest.

These statutory registers must be maintained either in paper or electronic form at the company’s registered office. The company is responsible for keeping these registers current and ensuring access for its members and directors. Failure to maintain the required statutory registers can result in fines from the registrar of companies, with penalties reaching up to ₹10 lakhs for non-compliance.

Benefits of Maintaining Statutory Registers

  • Transparency and accountability foster greater willingness among investors and stakeholders to engage with the company.
  • A solid internal control framework reduces the likelihood of fraud and other irregularities.
  • Quick resolution of disputes can help the company avoid costly litigation.
  • A good credit standing is likely to lead to favorable funding terms.

Conclusion

Statutory registers play a crucial role in corporate governance by ensuring transparent and accountable management of the company’s operations. Companies must diligently maintain their statutory registers to avoid penalties and uphold good governance practices.

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