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Microlesson · 5-min read

Maintenance of Records in Electronic Form - Section 120

# Maintenance of Documents in Electronic Form (Sec 120)

## Applicability

This is mandatory for:

  • Listed companies, OR
  • Companies with at least 1,000 shareholders / debenture-holders / other security holders

These companies may maintain records in electronic form.

## Responsibility (Rule 28)

Responsible persons: MD, CS, or any director/officer designated by the Board.

## Duties of Responsible Person

The person responsible shall ensure:

1. Records protected from unauthorized access/alteration/tampering.

2. Prevention of data loss due to damage or storage failure.

3. Signatories cannot deny authenticity of digitally signed records.

4. Secure and validated computer systems, software and hardware.

5. System detects invalid or altered records.

6. Records remain accurate, accessible, reproducible.

7. Records retrievable in readable and printable format.

8. Storage in non-rewritable, non-erasable format (e.g. PDF).

9. At least one daily backup — authenticated, dated, securely stored.

10. Restricted access to authorised persons.

11. Conversion from physical to electronic is complete, authentic, legible.

12. Records organised and indexed.

13. Integrity and confidentiality maintained.

## Standards for Electronic Records

Records must:

  • Follow formats prescribed in the Act and Rules.
  • Be accurately recorded for future reference.
  • Be readable, retrievable, printable.
  • Be digitally signed and dated wherever required.
  • NOT be altered or edited after being digitally signed.
  • Be updated as per the Act, with date of update recorded.

## Transition

Existing companies must convert physical records to electronic mode within 6 months of notification of Sec 120.

## Inspection of Electronic Records

  • Available for inspection.
  • Copies provided on payment (maximum ₹10 per page).
  • Must be a clear reproduction of the original.

## Coverage of 'Records'

Includes: any register, index, agreement, MOA, minutes, or any other document required under the Act.

Worked example

### Example 1

Example 1: A listed company stores its register of members in a Word document on a shared drive accessible to all employees. Comment.

Answer: This violates Rule 28. Electronic records must be stored in non-rewritable, non-erasable format (e.g., PDF), with restricted access to authorised persons only, and protected from unauthorized alteration. A Word document on a shared drive fails both tests.

### Example 2

Example 2: An unlisted company with 800 debenture-holders wants to maintain records electronically. Is it permitted?

Answer: No. Sec 120/Rule 27 requires either listed status OR at least 1,000 shareholders/debenture/security holders. With only 800, this company does not fall within the prescribed category.

⚠️ Common exam mistakes

  • Believing the 1,000 threshold counts only shareholders — it includes debenture-holders and other security holders.
  • Forgetting the 6-month transition window for converting physical records.
  • Confusing the maximum copy fee (₹10/page) with no fee — payment is required.
  • Assuming the CFO is automatically responsible — only MD, CS, or a Board-designated director/officer is responsible.
Bare-Act text Section 120 read with Rules 27, 28 & 29 · Companies Act, 2013 · click to expand
Sec 120: Without prejudice to any other provisions of this Act, any document, record, register, minutes, etc., required to be kept by a company; or allowed to be inspected or copies to be given to any person by a company under this Act, may be kept or inspected or copies given, as the case may be, in such electronic form as may be prescribed.
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