Preservation of Books & Penalty [Sec. 128(5) & (6)]
## Section 128(5) — Period of Preservation
BoA together with vouchers relevant to any entry shall be kept in good order;
For a period of not less than 8 financial years immediately preceding the relevant financial year;
Where the company has been in existence for less than 8 years, books for all preceding years must be kept.
### Investigation Exception
Where an investigation has been ordered in respect of the company under Chapter XIV, the Central Government may direct that books of account be kept for a longer period than 8 years.
## Section 128(6) — Penalty for Contravention
### Persons Responsible
The following persons are responsible for compliance and liable for contravention:
1. The Managing Director (MD);
2. The Whole-Time Director (WTD) in charge of finance;
3. The Chief Financial Officer (CFO);
4. Any other person of the company charged by the Board with the duty of complying with Sec. 128.
### Punishment
Fine — minimum ₹50,000, extending up to ₹5,00,000.
> Note: The contravention attracts only a fine (no imprisonment).
Worked example
### Example 1
Q. A company was incorporated on 1st April 2022. As on 31st March 2026, for how many years must BoA be preserved?
A. The company has been in existence for only 4 financial years (2022-23, 23-24, 24-25, 25-26). It must preserve BoA for all 4 preceding years, because the 8-year requirement applies only when the company has existed that long.
### Example 2
Q. SFIO has commenced an investigation into a company. The 8-year preservation period for FY 2010-11 is expiring. Can the Central Government compel longer preservation?
A. Yes. Under the proviso to Sec. 128(5), where an investigation has been ordered, the Central Government may direct preservation for a period longer than 8 years.
⚠️ Common exam mistakes
Stating the period as 7 years (this is the period under the older Companies Act, 1956) — under the 2013 Act it is 8 years.
Including auditors in the list of persons liable u/s 128(6) — auditors are NOT included; liability is on MD/WTD-Finance/CFO/person charged by Board.
Mentioning imprisonment — the punishment is fine only.
Bare-Act text Sec. 128(5) & 128(6) · Companies Act, 2013 · click to expand
Section 128(5): The books of account of every company together with the vouchers relevant to any entry in such books of account shall be kept in good order for a period of not less than eight financial years immediately preceding a financial year, or where the company had been in existence for a period less than eight years, in respect of all the preceding years: Provided that where an investigation has been ordered in respect of the company under Chapter XIV, the Central Government may direct that the books of account may be kept for such longer period as it may deem fit.
Section 128(6): If the managing director, the whole-time director in charge of finance, the Chief Financial Officer or any other person of a company charged by the Board with the duty of complying with the provisions of this section, contravenes such provisions, such managing director, whole-time director in charge of finance, Chief Financial Officer or such other person of the company shall be punishable with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees.