RECORDS IN ELECTRONIC FORM

Section 120 of the Companies Act 2013 lay down provision for maintenance and inspection of documents in electronic form. This is permitted that any document, record, register, minute etc may be kept in electronic form. The record so kept may be inspected in electronic form. The copy may also be furnished in electronic form.

MAINTENANCE AND INSPECTION OF DOCUMENT IN ELECTRONIC FORM:

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 there under, in electronic form. In 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. [Rule 27(1)]

This seems for maintaining record in electronic mode; company shall count all shareholders, debentures holder and other security holders once. Once figure come to one thousand or near such number, it should opt for electronic record.

The term “records” means any register, index, agreement, memorandum, minutes or any other document required by the Act or the rules made there under to be kept by a company.

The records in electronic form shall be maintained in such manner as the Board of directors of the company may think fit. The company shall keep in my following points:

1. (All) the records are maintained in the same formats and in accordance with all other requirements as provided in the Act or the rules made there under. [Rule 27(1)]
2. The information as required under the provisions of the Act or the rules made there under should be adequately recorded for future reference.
3. The records must be capable of being readable, retrievable and reproducible in printed form.
4. The records are capable of being dated and signed digitally wherever it is required under the provisions of the Act or the rules made there under.
5. The records, once dated and signed digitally, shall not be capable of being edited or altered.
6. The records shall be capable of being updated, according to the provisions of the Act or the rules made there under, and the date of updating shall be capable of being recorded on every updating. [Rule 27(2)]

Here, company have to create a record electronically and digitally signed it. This is possible to sign a Portable Document Format (PDF) and MS – Office files. Digital signature gives time and place stamp to a document. To change a document company need to remove earlier signatures. For example, a Minute of board meeting shall be saved forever after a digital signature and could not be changed thereafter. A removal of signature to edit it may cause contravention of rules relating signing of minutes. A minute for next meeting shall be a separate file (in computer term) and separately signed. All files shall be merged or kept in a folder to create a minute book.

SECURITY OF RECORDS MAINTAINED IN ELECTRONIC FORM:

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(1)]

The person who is responsible for the maintenance and security of electronic records shall-

1. provide adequate protection against unauthorized access, alteration or tampering of records;
2. ensure against loss of the records as a result of damage to, or failure of the media on which the records are maintained;
3. ensure that the signatory of electronic records does not repudiate the signed record as not genuine;
4. ensure that computer systems, software and hardware are adequately secured and validated to ensure their accuracy, reliability and consistent intended performance;
5. ensure that the computer systems can discern invalid and altered records;
6. ensure that records are accurate, accessible, and capable of being reproduced for reference later;
7. ensure that the records are at all times capable of being retrieved to a readable and printable form;
8. ensure that records are kept in a non-rewriteable and non-erasable format like pdf. version or some other version which cannot be altered or tampered;
9. ensure that at least one backup, taken at a periodicity of not exceeding one day, are kept of the updated records kept in electronic form, every backup is authenticated and dated and such backups shall be securely kept at such places as may be decided by the Board;
10. limit the access to the records to the managing director, company secretary or any other director or officer or persons performing work of the company as may be authorized by the Board in this behalf;
11. ensure that any reproduction of non-electronic original records in electronic form is complete, authentic, true and legible when retrieved;
12. arrange and index the records in a way that permits easy location, access and retrieval of any particular record; and
13. take necessary steps to ensure security, integrity and confidentiality of records.

INSPECTION AND COPIES OF RECORDS MAINTAINED IN ELECTRONIC FORM:

Where a company maintains its records in electronic form, any duty imposed by the Act or rule made there under to make those records available for inspection or to provide copies of the whole or a part of those records, shall be construed as a duty to make the records available for inspection in electronic form or to provide copies of those records containing a clear reproduction of the whole or part thereof, as the case may be on payment of not exceeding ten rupees per page.