Think of Section 88 as the company's attendance register — except instead of employees, it tracks every person who has money invested in the company. Every company is legally required to maintain this, and skipping it or doing it sloppily attracts penalties.
What must be maintained? Three registers: (a) Register of Members — separately for each class of equity and preference shares, noting whether each member is resident in India or outside India; (b) Register of Debenture-Holders; and (c) Register of Other Security Holders (e.g., holders of warrants or other instruments). Each register must also include an index of names — think of it as the A-to-Z tab in an old-school diary, so you can look up any member quickly. This index requirement is frequently tested as a standalone MCQ.
Depository shortcut (important!): If a company's shares are held in demat form, the register and index maintained by the depository (like NSDL or CDSL) under Section 11 of the Depositories Act, 1996 is deemed to be the company's own register. So listed companies with demat shareholders don't need a duplicate physical register — the depository's records count.
Foreign Register: A company may (not must) maintain a foreign register in a country outside India, but only if its Articles of Association authorise this. This register covers members, debenture-holders, or security holders residing outside India. It's a subset of the main register, not a replacement.
Penalty for default: If the register is not maintained or is maintained incorrectly — ₹3 lakh on the company and ₹50,000 on every officer in default. This is a civil penalty, not criminal prosecution. Both the company and the officer are separately liable — a distinction examiners love to test.
📊 Worked example
Example 1 — Penalty Calculation
Rajesh & Co. Pvt. Ltd. fails to maintain a register of debenture-holders for the entire financial year. The company has 3 officers who are in default (the MD, Company Secretary, and CFO).
Working:
- Penalty on company = ₹3,00,000
- Penalty on MD = ₹50,000
- Penalty on Company Secretary = ₹50,000
- Penalty on CFO = ₹50,000
- Total penalties = ₹3,00,000 + ₹50,000 + ₹50,000 + ₹50,000
Total liability = ₹4,50,000
Note: Each officer is independently liable; the ₹50,000 is not shared among them.
---
Example 2 — Foreign Register
Ms. Iyer's company, GlobalTech India Ltd., has 200 shareholders residing in the USA and UK. The board wants to maintain a foreign register in London for these overseas shareholders.
Can they do it? Check the Articles of Association first.
- If the AoA authorises a foreign register → Yes, they may maintain one in London.
- If the AoA is silent or prohibits it → No, they cannot, unless the AoA is amended first.
Answer: Authorisation in AoA is a mandatory pre-condition. Passing a board resolution alone is not sufficient.
⚠️ Common exam mistakes
- Students think the index is optional — it is not. Every register under Section 88 must include an index of names. Omitting this counts as non-compliance and can trigger penalties.
- Confusing 'may' and 'must' for the foreign register — students write that a company must keep a foreign register for overseas members. Wrong. It is optional and only permitted if the AoA authorises it.
- Forgetting the depository deemed-register rule — in exam scenarios involving listed/demat companies, don't say the company must separately maintain a physical register. The depository's records under the Depositories Act, 1996 are deemed to be sufficient.
- Applying one flat penalty instead of separate penalties — the penalty is ₹3 lakh on the company AND ₹50,000 on each defaulting officer. Don't add them into one pool or divide them among officers.
- Missing the 'class-wise' requirement for the members' register — the register must separately record equity shareholders and preference shareholders (and further by class if multiple classes exist). A single combined list is non-compliant.
📖 Bare Act text — Section 88, Companies Act 2013
(click to expand)
(1) Every company shall keep and maintain the following registers in such form and in such manner as may be prescribed, namely:— (a) register of members indicating separately for each class of equity and preference shares held by each member residing in or outside India; (b) register of debenture-holders; and (c) register of any other security holders. (2) Every register maintained under sub-section (1) shall include an index of the names included therein. (3) The register and index of beneficial owners maintained by a depository under section 11 of the Depositories Act, 1996, shall be deemed to be the corresponding register and index for the purposes of this Act. (4) A company may, if so authorised by its articles, keep in any country outside India, in such manner as may be prescribed, a part of the register referred to in sub-section (1), called 'foreign register' containing the names and particulars of the members, debenture-holders, other security holders or beneficial owners residing outside India. (5) If a company does not maintain a register of members or debenture-holders or other security holders or fails to maintain them in accordance with the provisions of sub-section (1) or sub-section (2), the company shall be liable to a penalty of three lakh rupees and every officer of the company who is in default shall be liable to a penalty of fifty thousand rupees.
Test yourself
Practice questions on this section, AI-graded with citations.
⚡ Practice now →