Digital Maintenance of Statutory Records: Adapting to Companies Act 2013

Statutory registers are compulsory registers that a company in India is required to keep according to the Companies Act 2013. These registers contain vital details concerning a company’s structure, activities, and compliance, including lists of shareholders and directors, records of meetings, accounting transactions, and so on. In India, the Companies Act 2013 lays down a legal structure that mandates companies to keep registers like the register of members, register of directors and KMP, register of charges, minutes of the meetings, etc.

Today, more and more companies are moving towards digital statutory records for a more streamlined, secure, and accessible alternative to those tedious and bulky, paper-based formats. Digital statutory records can be maintained in compliance with the law, provided they are kept up-to-date, easily retrievable, and protected against unauthorized access.

Failure to keep them (either in hard copy form or digitally) could have serious repercussions for not only the company but also its directors and other officers and can expose them to potential legal action or reputational harm. Proper maintenance of statutory records helps in the better running of the business and also serves as an ease during audits, inspections, and disputes, thus contributing to the company’s sustainability and credibility in the long run.

Mandatory Statutory Registers Under the Companies Act, 2013—

Below is a list of the primary statutory registers that must be maintained under the Companies Act, 2013 -

India’s legal framework for digital record-keeping is anchored in several key legislations, primarily the Companies Act, 2013, and the Information Technology (IT) Act, 2000—

1. Digitized Statutory Records Under Section 120 of the Companies Act, 2013, companies have the option to have the statutory records, registers, returns, and other documents in electronic form, i.e., digital statutory registers. Such information has to be securely stored, accessible, and protected from unauthorized access.
2. Rules 27 and 28 of the Companies (Management and Administration) Rules, 2014 state that electronic records need to be authenticated by digital signatures with time stamps and audit trails to maintain the integrity of the record.
3. Section 128 allows books of account to be maintained electronically, provided they are accessible in India for at least eight financial years for regulatory compliance.

1. In the IT Act 2000, electronic records and digital signatures have been provided legal recognition and placed on-par with the same of physical records and signatures. Section 4 provides that information does not need to be in writing where it appears in electronic form and is accessible so as to be usable for subsequent reference.
2. The Act defines the standards for electronic signatures, their reliability, and the security protocols required for authentication and integrity of digital records.

Digitizing statutory records under the Companies Act, 2013, to create digital statutory records offers a range of significant advantages for companies, enhancing compliance, efficiency, and security—

• Instant Accessibility and Remote Retrieval: Electronic records can be accessed instantly from anywhere, enabling stakeholders, auditors, and regulators to retrieve information without physical presence or delays.
• Improved Efficiency and Automation: Automated record-keeping reduces manual errors, ensures timely updates, and streamlines filing and reporting processes, making compliance with statutory requirements more efficient.
• Enhanced Security and Data Integrity: Digital statutory records benefit from encryption, access controls, digital signatures, and audit trails, protecting against unauthorized alterations and ensuring authenticity and traceability.
• Cost Savings and Reduced Physical Storage: Eliminating the need for physical registers reduces costs related to printing, paper, and storage space and minimizes the administrative burden of maintaining large volumes of paper documents.
• Facilitates Statutory Audits and Inspections: Electronic records simplify statutory audits, inspections, and due diligence by making statutory registers and documents easily searchable and accessible for review.
• Regulatory Compliance and Timely Filing: Digital systems support timely filing of annual returns, financial statements, and other statutory documents with regulatory authorities, reducing the risk of penalties due to missed deadlines.
• Supports Corporate Governance and Transparency: Digital statutory records promote transparency, accountability, and good governance by providing accurate, up-to-date information for decision-making and stakeholder confidence.

Compliance under Companies Act for Digital Maintenance –

Companies opting to maintain statutory records electronically under the Companies Act, 2013, must adhere to several specific compliance requirements to ensure the legal validity, security, and accessibility of their digital records –

• Format and Content: Electronics statutory records shall be in the same format and shall contain the same content as prescribed for the physical records in the Act and rules made thereunder. Everything you want to know must be well-documented for future reference.
• Readability, Retrieval, and Reproducibility: All digital statutory records have to be readily legible and accessible (when required for production in printed form). This is to prevent any censorship by regulators or interested parties that may not have technical expertise.
• Authentication and Digital Signatures: Electronics statutory records need to be authenticated using digital signatures of the authorized signatories, in accordance with the Information Technology Act, 2000. Records must be able to be dated and (where necessary) digitally signed.
• Security and Access Controls: Firms must have adequate systems in place to ensure security over the records so that they cannot be accessed, altered, or annihilated by unauthorized persons. Diameter records should be updateable only by those authorized to do so, and mechanisms to record changes made to the records should be in place.
• Retention and Backup: Records will have to be kept for a minimum of eight financial years and kept at an approved place by the Board of Directors. Periodic backup, risk authentication, dating, and safe storage shall be implemented for the protection against loss or damage to data due to system failures.
• Audit Trails and Updates: All changes to an electronic record need to be recorded with the date of change for quality assurance and audit purposes. Digitally signed and dated records should not be editable or changeable.
• Inspection and Accessibility: Electronic maintenance of company records must be made available for inspection by regulatory authorities, such as the Registrar of Companies (ROC), and other stakeholders as required by law. The system should allow for easy access and retrieval during audits or legal proceedings.
• Filing and Reporting: Statutory records must be filed electronically with the Ministry of Corporate Affairs (MCA) using prescribed e-forms and digital signatures, ensuring timely and compliant reporting.

• Document Management Systems (DMS): There are various Document Management Systems (DMS) software that offer centralized stores for maintaining, sorting, and retrieving statutory records. These platforms provide cloud and on-premises deployment, security, document classification, workflow automation, and mobile access, among other capabilities.
• Records Management Systems (RMS): There are several different Records Management Systems (RMS) that can support end-to-end management of records (physical and electronic). They ensure statutory documents remain true and reliable and maintain integrity and assist in keeping organizations ‘audit ready’ to ensure compliance with regulations.
• Compliance Management Software: There are various compliance management software available that are tailored for statutory and regulatory compliance. They offer real-time legal updates, automated alerts, compliance checklists, document repositories, access controls, expiry alerts, and audit trails. These solutions ensure organizations stay updated with changing regulations and reduce the risk of non-compliance.
• Cloud and Mobile Access: Cloud-based solutions allow authorized users to access statutory records securely from any location or device, improving collaboration and operational flexibility.
• Disaster Recovery and Backup: With resilient backups and disaster recovery, statutory records are safeguarded against loss, system malfunction, or a physical disaster.

Transitioning from physical to digital statutory records is a complex process that involves more than simply scanning documents; it requires a fundamental shift in how organizations manage, secure, and access information. Here are some of the main challenges commonly encountered –

• Resistance to Change: Employees and stakeholders often resist new digital systems, preferring familiar paper-based workflows. Effective change management and clear communication of benefits are essential to overcome this hurdle.
• Data Migration Issues: Migrating large volumes of existing records accurately is labor-intensive and prone to errors. A phased approach and professional data services can help ensure data integrity during the transition.
• Financial and Resource Constraints: The upfront costs for digitalization technology, software, hardware, and staff training can be significant, making it challenging for organizations with limited budgets.
• Technical and Process Complexity: Establishing proper naming conventions, access controls, validation processes, and retention schedules for digital files requires careful planning and new skills sets.
• Data Security and Privacy: Digital statutory records must be protected against cyber threats and unauthorized access. Enduring compliance with data privacy laws and implementing robust security measures like encryption and access controls is critical.
• Long-term Preservation and Usability: Ensuring the long-term integrity, readability, and discoverability of digital statutory records is complex due to evolving technologies and formats. Organizations need strategies for digital preservation and regular monitoring to prevent data loss or corruption.
• Compliance and Auditability: Digital records must meet legal standards for authenticity and audit trails. Maintaining proper documentation and procedures is essential for regulatory compliance.
• Operational Disruption: Balancing the transition with ongoing business operations can be challenging, as digitization efforts may temporarily disrupt normal workflows.

Role of the Company Secretary—

The Company Secretary (CS) plays a central role in ensuring that a company adapts effectively to the digital maintenance of statutory records as mandated by the Companies Act, 2013.

• Ensuring Statutory Compliance in a Digital Environment: It is the prime duty of Company Secretary to ensure that the company complies with various provisions of the Companies Act, 2013, including for the maintenance of statutory registers and records in electronic mode. This involves understanding the legal framework for digital record-keeping and ensuring that all digital records meet the standards set by law.
• Overseeing Digital Record-Keeping Systems: The CS is responsible for establishing, monitoring, and maintaining secure digital systems for statutory records. This includes selecting appropriate software, ensuring data security, implementing access controls, and maintaining audit trails to safeguard the authenticity and integrity of records.
• Authentication and Filing: Company secretaries are responsible for authenticating the digital statutory records (in most cases digitally signed) and ensuring that the records are easily accessible and filed for inspection in cases where regulators and interested parties require access as per the provisions of the law.
• Advising the Board and Management: In the digital context, the CS advises the board of directors on best practices for electronic record-keeping, updates on regulatory changes related to digital compliance, and the adoption of new technologies to enhance governance and transparency.

Adopting digital maintenance for statutory records under the Companies Act, 2013 requires strict adherence to legal standards and robust operational protocols. Here are the best practices to ensure compliance, security, and efficiency –

• Maintain Format, Completeness, and Accessibility: Keep electronic statutory records in the same format as required for physical records, ensuring all legally mandated information is included. Records must be readable, retrievable, and reproducible in printed form at any time.
• Authentication and Digital Signatures: Authenticate records using digital signatures of authorized officials, as mandated by the Companies Act, 2013, and the Information Technology Act, 2000. Once dated and digitally signed, records should not be capable of being altered or edited.
• Security and Data Protection: Implement strong encryption, access controls, and audit trails to prevent unauthorized access, tampering, or deletion of records. Use cybersecurity measures to protect against threats like hacking, ransomware, and data breaches.
• Retention and Backup: Retain statutory records for at least eight financial years, as required by Section 128 of the Companies Act, 2013. Store backups on servers located in India and ensure regular (preferably daily) automated backups to prevent data loss.
• Location and Inspection: Store digital records at a location approved by the Board of Directors and inform the Registrar about the service provider’s details, if using cloud storage. Ensure records are available for inspection by regulatory authorities and stakeholders electronically, as required by law.
• Filing and Reporting: File statutory records and returns electronically with the Ministry of Corporate Affairs (MCA) using prescribed e-forms and digital signatures, ensuring timely and accurate reporting.
• Stay Updated with Regulatory Changes: Regularly monitor MCA notifications and amendments related to electronic record-keeping and promptly update internal processes to remain compliant.

The shift to digital statutory records maintenance, as enabled by the Companies Act, 2013, marks a transformative step in modernizing corporate governance in India. By allowing and encouraging the use of electronic records, the Act has made compliance more efficient, transparent, and accessible, reducing administrative burdens and enabling real-time access for stakeholders and regulators. Digital statutory records not only streamline statutory filing and reporting but also enhance data security, auditability, and disaster recovery, aligning Indian corporate practices with global standards.

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