Documentation under Companies Act – Coding | Nomenclature

The Company Secretary is responsible for maintaining, storing, retrieving, certifying and explaining corporate documents. Proper document management includes safe storage, backup of records, timely access and compliance with statutory retention requirements.

As per section 88 of the Companies Act, 2013, every company limited by shares must maintain a Register of Members in Form MGT-1 from the date of its registration.

Penalty for Non-Compliance

If a company fails to comply with section 88:

• The company and every officer in default are liable to a fine not less than Rs. 50,000 and up to Rs. 3,00,000.
• In case of a continuing default, an additional fine of Rs. 1,000 per day may be imposed.

Case Law – M/s SDU Holdings Private Limited

During an inquiry under section 206, the Registrar of Companies, Bangalore found that the Register of Members (Form MGT-1) maintained by the company was incomplete. After giving a reasonable opportunity of being heard, the Adjudicating Officer imposed penalties on the company and its directors for violation of Section 88.

Conclusion

The case highlights the importance of proper maintenance of statutory registers. Failure to maintain complete records attracts monetary penalties on the company and its officers. Therefore, the Company Secretary must ensure accurate and timely compliance with statutory record-keeping requirements.

Section 120 of the Companies Act, 2013 read with Rule 27 & 28 of the Companies (Management and Administration) Rule, 2014 provides for maintenance of documents in electronic form.

The Rule 27 provides that every listed company or a company having not less than 1000 shareholders, debenture holders and other security holders, may maintain its records in electronic form.

Section 2(36) of the said Act relates to the definition of “document” which includes summons, notice, requisition, order, declaration, form and register, whether issued, sent or kept in pursuance of Companies Act or under any other law for the time being in force or otherwise, maintained on paper or in electronic form.

The term “records” means any register, index, agreement, memorandum, minutes or any other document required by the Act or the Rules made thereunder to be kept by a company. Therefore, such documents and records can also be maintained in electronic form.

However, the records in electronic form shall be maintained in such manner as the Board of directors of the company may think fit, provided that:

(a) 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;

(b) the information as required under the provisions of the Act or the rules made there under should be adequately recorded for future reference;

(c) the records must be capable of being readable, retrievable and reproducible in printed form;

(d) 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;

(e) the records, once dated and signed digitally, shall not be capable of being edited or altered;

(f) 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.

The term documentation includes any and all forms of documentation recorded by a person in professional capacity in relation to his professional duties and includes written and electronic records, audio and video tapes, emails, facsimiles, images, charts, check lists, communication books, management reports, incident reports and working notes or any other type or form of documentation.

The good documentation promotes good corporate governance practices and compliance level of the company and also improves communication and dissemination of information between and across various stakeholders.

These guiding principles support professionals, employers, policy makers and managers in assessment, planning, execution and evaluation.

Examples of Poor Documentation Practices:

• Document with errors, correction, not signed/dated, and didn’t include a reason for the correction;
• Write-overs, multiple line-through & use of “White-out” or other masking device;
• Recording of events is not in sequence & tabled;
• The delegation of work is not recorded/documented;
• Standards operating procedures as adopted by the professional is not authorised.

Examples of Good Documentation Practices:

• Records should be completed at time of activity or when any action is taken;
• Superseded documents should be retained for a specific period of time;
• Concise, legible, accurate and traceable;
• Picture is worth a thousand words;
• Clear examples; Don’t assume knowledge/information.

Good documentation practices is a set of best practices for documentation and record keeping. It aims to preserve the data integrity of important documents and records and can also serve as guidelines for how to record information and store data appropriately.

The good documentation promotes good corporate governance practices and compliance level of the company and also improves communication and dissemination of information between and across various stakeholders.

These guiding principles support professionals, employers, policy makers and managers in assessment, planning, execution and evaluation.

Good Documentation Do’s and Don’t

The term documentation includes any and all forms of documentation recorded by a person in professional capacity in relation to his professional duties and includes written and electronic records, audio and video tapes, emails, facsimiles, images, charts, check lists, communication books, management reports, incident reports and working notes or any other type or form of documentation.

The good documentation promotes good corporate governance practices and compliance level of the company and also improves communication and dissemination of information between and across various stakeholders. Also, the good documentation practices and policies demonstrate the professional obligation, accountability and legal requirement to communicate and record client information and good secretarial practice.

The guiding principles for good documentation are as follows:

1. Clear
2. Correct
3. Concise
4. Comprehensive
5. Complete
6. Collaborative
7. Contemporary
8. Client Centric
9. Consecutive
10. Confidential

Advantages of the Electronic Records:

• Cost Effective – Storing and maintaining records in digital form is much cheaper than in any other format. With the increase in the technology advancement, the Digital media costs drop every day.
• Ease of Use – It’s very easy to locate and share electronic documents through Computer’s aid searching now a days the process of filing doesn’t exist anymore. The Document management system take care for finding and maintaining Records consistent locations.
• Labor Savings – The labour required to locate, manage and dispose of electronic documents is almost nil and minimum. With electronic documents, all the steps like filing collating, stapling etc. can be automated and that labour completely disappears.
• Search Ability – Electronic documents can be made searchable by doing OCR of a document and make the whole text keyword searchable. That is not possible with paper documents.
• Portability – It’s very easy to transport electronic documents. No more boxes of records and trucks and semi-trucks to haul records archives. They can easily be stored on a removable hard drive or thumb drive and taken to the courthouse or to the field office.
• Version Tracking – In case of the version tracking, it is very easy with electronic documents, making it easy to see who has made changes to a document, when they made those and what the document looked like before the change. Version tracking and document management in the hard copy world is much more complex and much more costly.

Document management refer the process of managing and tracking of the documents and records through an electronic or physical source of documents. In an electronic repository, Document Management Systems (DMS) works by using a computer system and software to store, manage and track electronic documents and electronic images of paper-based information captured through the use of a scanner.

The term document management system can be defined as the software that controls and organises documents of an organisation. It incorporates document and content capture, workflow, document repositories and output systems, and information retrieval systems. Also, the processes used to track, store and control documents.

Advantages of DMS are as follows:

• Tracking on check-in/check-out by various officers
• Locking and unlocking of Document
• Simultaneous editing
• Document Version Control
• Roll-back options/Retrieve option
• Ease in Audit trail
• Annotation and Stamps

Section 120 of the Companies Act, 2013 (the Act) read with Rules 27 & 28 of the Companies (Management and Administration) Rule, 2014, provides for maintenance of documents in electronic form. The provisions also provide for inspection of documents maintained in electronic form. It states that any document, record, register, minutes, etc. that are required to be kept by a company or allowed to be inspected or copies to be given to any person by a company under the Act, may be kept or inspected or copies given, as the case may be, in electronic form. Rule 27 provides that every listed company or a company having not less than one thousand shareholders, debenture holders and other security holders, may maintain its records in electronic form.

For naming of any documents adopting good file naming conventions can help ensure that files will work with different operating systems. Further, the file names can be either self-descriptive or non-descriptive.

• The Descriptive file names are useful for small, well-defined projects with existing identification schemes that link the digital object to the source material. However, inconsistent application of terms or typos will increase to indexing and sorting errors.
• Non-descriptive file names are usually system-generated sequential numerical string or the system based, such as a digital ID number, combination of Date and time, name of original file and are often linked to meta data stored elsewhere. Non-descriptive file names are often created for large scale digitization projects and may employ a digital ID number and numerical sequences to indicate batch or parent-child relationships. The advantage of non-descriptive names is that there is less chance of repeated or non-unique file names within a data structure.

Some applications and computer scripts could not recognize spaces or process files differently when using spaces. A best practice is to replace spaces in file names with an underline (_) or hyphen (-). However, the punctuation, symbols, or special characters (periods, commas, parentheses, ampersands, asterisks, etc.) should be avoided.

The following are best practices for file naming.

The File names should:

• Be unique and consistently structured;
• Be persistent and not tied to anything that changes over time or location;
• Limit the character length to no more than 25-35 characters;
• Use leading 0s to facilitate sorting in numerical order if following a numeric scheme “001, 002, 010, 011 … 100, 101, etc.” instead of “1, 2, …10, 11 … 100, 101, etc.”;
• Contain a file format extension; Use a period followed by a file extension (for example, .tif, .jpg, .gif, .pdf, .wav, .mpg);
• Use lowercase letters. However, when a name has more than one word, start each word with an uppercase letter for example, “File_Name_Convention_001.doc”;
• Use numbers and/or letters but not characters such as symbols or spaces that could cause complications across operating platforms;
• Use hyphens or underscores instead of spaces;
• Use standard date notation (YYYY-MM-DD or YYYYMMDD);
• Avoid blank spaces anywhere within the character string; and
• Not use an overly complex or lengthy naming scheme that is susceptible to human error during manual input, such as “filenameconventionjoesfinal versioneditedfinal.doc”.

The strength of a folder and file naming convention is dependent on the proposed naming structure and the quality and quantity of the data elements chosen to build it. It should be of no surprise that for any business activity there is always an ideal naming structure. However, any structured naming convention that attempts to be all encompassing may result in overkill and unwieldiness.

(a) D:\TZP\FY\22-23\AR\MGT-7.doc

Rule – Avoid extra-long folder names and complex hierarchical structures but use information rich file names instead.

(b) PTKRESORTS_SearchReport_Invoice30.07.2023.pdf

Rule – Put sufficient elements in the structure for easy retrieval and identification but do not overdo it.

(c) Mohit-Nair_Maxlife_8561_3_POLICY_2020-10-19.pdf | | WhitePaper_Structured File Naming Strategy.doc

Rule – Use the hyphen (-) to define it words within an element or capitalise the first letter of each word within an element.

To assure the best quality of documents, it is to be assured that sufficient records are maintained to furnish evidence of the activities affecting quality. The records should incorporate the following:

(a) Operating Logs – the names of the individuals who all have worked on the same documents;

(b) Results of Reviews – the recording of the changes suggested by each reviewer and basis of the rejection on Non agreement;

(c) Inspections – list of individuals who have access of the records and have inspection rights of the same;

(d) Monitoring of Work Performance – will ease in the monitoring of work performed by the person to whom the file is shared;

(e) Information Analyses – Provide ease in the Information system of the organisation and tracking of files.

Records should be identifiable and retrievable and should consistent with applicable regulatory requirements. The company should comply with requirements concerning record retention, such as duration, location, and assigned responsibility. Every record must be well managed in order to ensure that they are protected for both administrative purposes and to serve as evidence of the organization’s work.

Records management provides a professional approach to caring for records. The care of records and archives is governed by three key concepts.