Can Companies Keep Accounts Outside Office

In today’s world where everything rapidly changes, companies are no longer restricted to the traditional office setups. Digital transformation, remote work, outsourcing, and centralized accounting systems have changed so much in how organizations can manage their financial records. One common question that arises—especially among startups, SMEs, and growing enterprises- is whether a company can legally maintain its books of accounts at a location other than its registered office.

This question particularly arises as relevant among the businesses operating in multiple cities, using cloud-based accounting systems, or outsourcing their accounting functions to third parties.

Table of Contents

What are Books of account?

“Books of accounts” means financial records maintained by a company to document its daily financial transactions. These records provide the company’s true and fair view of the financial position and performance.

Mandatory accounting principle:

Books of account shall be maintained on an accrual basis using the double-entry system of accounting.

Pursuant to Section 2(13) of the Companies Act, 2013 Books of Accounts include the following:

Receipts & Expenditure: The total sum of money received and expended by the company during the year for furtherance of business;
Sales & Purchases: Details of all sales and purchases made by the company;
Assets & Liabilities: Records of what the company owns and owes as its assets and liabilities;
Cost Records: Cost of records as per section 148 of the Companies Act, 2013 (if applicable).

Types of records:

Records that are maintained at the registered office are as follows:

Financial records: such as cash book, journal, ledgers and vouchers that verify the transactions.
Operational records: Assets and liabilities statement, sale and purchase records.
Statutory records: Books of Minutes (such as Board, Committee meeting and General Meeting) and register of all receipts and expenditures of the company in a financial year.

For maintaining these types of records, we can use digital tools or software to track all income and expenses made by the company for ensuring accurate financial reporting and taxes.

Purposes for maintenance of Books of accounts:

Following are the purpose for maintenance of books of accounts are as:

Legal compliances- To maintain records, it shows a true & fair view of the company which ensures adherence to statutory requirements;
Financial performance evaluation- By keeping proper books of accounts, the financial health of the company can be evaluated;
Fraud Detection- By maintaining books helps in timely reconciliation and error detection;
Decision Making- It helps the management to take strategic decisions for business growth of the company.
Operational Efficiency- It ensures the company to reduce cost, which optimize resource allocation, and make informed strategic decisions.

Can Books Be Maintained Outside the Registered Office?

Yes, According to Section 128 of the Companies Act, 2013 India, a company may maintain its books of account at a place other than its registered office within India, subject to compliance with prescribed conditions.

Conditions which to Be Fulfilled are:

Board of Directors Approval

The foremost requirement is

The company must pass a Board Resolution

The Resolution Should Include the following:

Decision to maintain books at another location
Full address of the new location
Reasons for such a decision
Authorization of responsible officers

This ensures that the decision is approved as per established procedures and duly documented by the company.

Filing with the Registrar of Companies (ROC)

After passing the Board Resolution, the company shall file Form AOC-5 with the ROC on MCA portal.

Time Limit:

Within 7 days from the date of the Board Resolution

Purpose:

To officially inform the government about the location of books

Failure to file Form AOC-5 shall be treated as non-compliance with the applicable regulatory requirements.

Location Must Be Within India

Physical books must be kept within India
Electronic records may be stored outside India but must remain accessible in India

Accessibility for Inspection

Even if books are kept elsewhere:

They must be available for inspection
Directors have the right to inspect them
Authorities like ROC or auditors must be able to access them

Maintenance in Electronic Form

Books of account may be maintained in electronic form, subject to the following conditions for electronic records:

Conditions for Electronic Records:

They must remain accessible in India
They must be retained in their original format
They must be complete and unaltered
They must have proper backup
They must be capable of being displayed in readable form

Branch Office Accounts

If a company has branch offices:

Books related to branch transactions may be kept at the branch
Periodic summarized returns must be sent to the registered office

Procedure For Maintaining Books of Accounts other than Registered Office:

If a company decides to keep its books of accounts at a place other than the registered office then, these are the procedure to be followed:

A board of directors shall conduct a board meeting.
In board meeting a board resolution must be passed approving the new location.
The company shall intimate the Registrar of Companies (ROC) by filing form AOC-5 within 7 days of passing the resolution.
Form AOC-5 is typically an STP (Straight-Through Process) form.

Attachments required for Form AOC-5 on MCA Portal:

Following are the attachments required on MCA for AOC-5 are:

A True copy of the Board resolution passed by the Board of Directors;
A standard No Objection Certificate (NOC) from the owner (if the premises are rented or leased);
A copy of a Lease deed, Conveyance deed or Rent Agreement, (if premises are not owned by the company);
Utility Bill (e.g., electricity bill, water bill, mobile bill etc.) as an address proof not older than 2 months or 60 days;
Photograph of the premises showing inside & outside views with one director working.

Reasons for Maintaining Books Outside Registered Office

The reasons for maintaining the books of account at a place other than the registered office are as follows:

Centralized Accounting

Companies with multiple branches often:

Maintain books of account at a central location, which improves efficiency and consistency.

Outsourcing

Many companies outsource their accounting to the following:

Chartered accountants
Professional firms

Use of Technology

Cloud-based accounting systems allow the following:

Remote access of financials.
Real-time updates about their financial performance.

Cost Reduction

Reduces infrastructure costs of the company.
Saves administrative expenses such as maintenance costs of the company.

Multi-Location Business

Companies operating in multiple cities need:

Flexible record-keeping systems

Practical Risks & Compliance Challenges

While maintaining books other than registered office, company may face certain challenges.

Delay in regulatory inspection
Data security risks (especially in cloud systems)
Miscommunication between locations
Non-compliance with AOC-5 filing
Difficulty during audits

Preservation of records:

The preservation of records shall be carried out in accordance with the applicable legal and regulatory requirements.

As per the Companies Act, 2013, the company shall preserve books of accounts, financial records, and relevant vouchers for a period not less than eight financial years.
Books must be maintained on an accrual basis, often electronically.

Penalty:

Failure to comply with the provisions of Section 128 of the Companies Act, 2013, for not maintaining books of accounts may result in penalties on:

The Managing Director
Whole-time Director (Finance)
Chief Financial Officer
Any other person charged with the responsibility

Such penalties include fines and, in certain cases, imprisonment also.

Fine: Every Officer in Default is liable for a fine from not less than ₹50,000, which extends to ₹5,00,000 for non- maintenance of books of accounts;
Imprisonment: Officers responsible may be imprisoned for up to one year; or
Both fine and imprisonment.

Offences Include:

Following are the Offences which are includes in penalty:

Not maintaining proper books of accounts of the company.
Not filing of AOC-5 with the registrar of companies (ROC).
Not allowing inspection for investigation.

Example:

If a company has its registered office in West Bengal but maintains its books of account at its branch office in Gurugram, where the legal department is located, it is considered that the books of account are kept at a place other than the registered office. Similarly, if a company outsources their legal work to a Professionalfirm in another city, district, or state, so that books can be maintained. They are treated as being maintained at that location.

STEP- by- step procedure to fill out form AOC-5:

The following steps are to be followed for filling out Form AOC-5 in a formal and systematic manner.

First, go to the MCA Portal to login with your credentials.
Navigate to ‘MCA services’-> ‘company e-filings’ -> ‘forms and returns’ and select ‘e-Form AOC-5’.
Form AOC-5: Open first and fill the company CIN (Corporate Identity Number), by entering the CIN all company details will be auto-populated.
Enter the complete and correct address of the company where the books of accounts are to be maintained.
Enter the date of the board resolution that approves the changes.
Mention the name of the police station as per the company’s jurisdiction over the new premises.
Attach all mandatory documents, including board resolution, NOC, premises picture, and utility bill.
Then once the form is filled, download the FORM then check all details and affix the DSC (Digital Signature Certificate) of the director, manager, CEO, CFO, and Company Secretary.
Upload the file and make payment of applicable fees.
Since it is an STP (Straight-Through Process) the form is approved, and then download the company’s master data.

Quick Comparison

Basis	Registered office	Other location
Default requirement	Yes	No
Board Resolution	Not required to pass	Required to pass
ROC Filing	Not required	AOC-5 required
Compliance Risk	Low	Higher

Key takeaways are:

Board approval is mandatory.
Form AOC-5 must be filed within 7 days.
Books must remain accessible.
Electronic maintenance is allowed.
Non-compliances lead to penalties.

Conclusion:

While shifting the books of account from registered office may enhance operational efficiency, any failure to comply with statutory provisions particularly obtaining Board approval and intimating the Registrar of Companies may attract significant penalties. Accordingly, companies shall ensure that accessibility, transparency, and strict compliance are maintained at all times.

FAQs:

Q1: Filing to ROC mandatory for change in books of account registered office?

Yes, Form AOC-5 must be filed with ROC within 7 days.

Q2: Can books be kept outside India?

Only in electronic form, and it must be accessible in India.

Q3: Can directors inspect books?

Yes, Directors can inspect books of account at any reasonable time.

Q4: Is electronic accounting allowed?

Yes, subject to prescribed conditions as applicable.

Q5: Is this applicable to all companies?

Yes, irrespective of the size of companies.

Can a company maintain books of accounts at other than its registered office