Amended and updated notes on section 171 of Companies Act 2013. Detail discussion on provisions and rules related to members’ right to inspect.
Chapter XI (Sections 149–172) of the Companies Act, 2013 (CA 2013) deals with the provisions related to appointment and qualifications of directors. Section 171 of CA 2013 provides for members’ right to inspect.
Recently, we have discussed in detail section 170 (Register of directors and key managerial personnel and their shareholding) of CA 2013. Today, we learn the provisions of section 171 of Companies Act 2013.
The provisions of section 171 are effective from 1-April-2014. You may refer Notification No. S.O. 902(E) issued dated 27.03.2014. In this article, you will learn detail of the provisions of section 171 of the Companies Act 2013 read with the Companies (Appointment and Qualification of Directors) Rules, 2014.
| Name of Act | The Companies Act 2013 |
|---|---|
| Enacted by | Parliament of India |
| Administered by | Ministry of Corporate Affairs (MCA) |
| Number of Chapters | 29 |
| Number of Sections | 484 (470-43+57) |
| Number of Schedules | 7 |
| You are reading: | |
| Chapter No. | XI |
| Chapter Name | Appointment and Qualifications of Directors |
| Section No. | 171 |
| Section Name | Members’ Right to Inspect |
| Monthly Updated Edition | Company Law PDF |
Rights of members to Inspect Registers
Inspection of Register [Section 171(1)]:
As per section 171(1) of the CA 2013, the register kept under sub-section (1) of section 170, —
(a) During Business Hours: The register shall be open for inspection during business hours and the members shall have a right to take extracts therefrom and copies thereof, on a request by the members, be provided to them free of cost within 30 days; and
(b) At AGM: The register shall also be kept open for inspection at every annual general meeting of the company and shall be made accessible to any person attending the meeting.
Application to Registrar [Section 171(2)]:
If any inspection as provided in clause (a) of sub-section (1) is refused, or if any copy required under that clause is not sent within thirty days from the date of receipt of such request, the Registrar shall on an application made to him order immediate inspection and supply of copies required thereunder.
After reading provisions of section 171, you may keep these facts into mind for better understanding:
- Register of Directors and KMP shall be available for inspection during business hours only.
- Register of Directors and KMP shall be inspected only by members of the company. That means if you are not member of the company, you are not allowed to inspect the registers maintained under section 170 of the CA 2013.
- Members may make a request to take extracts and copies of the registers of Directors and KMP of the company.
- Within 30 days of request, the members shall get copies or extracts of Registers of Directors and KMP of the company.
- At every AGM of the company, the registers of Directors and KMP shall be made available for inspection to any person attending the meeting.
- If inspection is denied by the company or copies not sent within 30 days of request then the member may make application to Registrar and thereafter the Registrar order immediate inspection and supply of copies required thereunder.
As per section 2(55) of CA 2013, “member”, in relation to a company, means—
- (i) the subscriber to the memorandum of the company who shall be deemed to have agreed to become member of the company, and on its registration, shall be entered as member in its register of members;
- (ii) every other person who agrees in writing to become a member of the company and whose name is entered in the register of members of the company;
- (iii) every person holding shares of the company and whose name is entered as a beneficial owner in the records of a depository;
Exemptions to Government Company:
Note that the provisions of Section 171 shall not apply to a Government Company in which the entire share capital is held:
- by the Central Government; or
- by any State Government or Governments; or
- by the Central Government or by one or more State Governments.
The above exemption is granted to Government Company vide Notification No. G.S.R. 463(E) dated 5th June, 2015.
Section 171 of Companies Act 2013: Members’ right to inspect
Section 171 shall come into force on 1st April, 2014 vide Notification No. S.O. 902(E) issued dated 27.03.2014.
(1) The register kept under sub-section (1) of section 170, —
- (a) shall be open for inspection during business hours and the members shall have a right to take extracts therefrom and copies thereof, on a request by the members, be provided to them free of cost within thirty days; and
- (b) shall also be kept open for inspection at every annual general meeting of the company and shall be made accessible to any person attending the meeting.
(2) If any inspection as provided in clause (a) of sub-section (1) is refused, or if any copy required under that clause is not sent within thirty days from the date of receipt of such request, the Registrar shall on an application made to him order immediate inspection and supply of copies required thereunder.
Exception/ Modification/ Adaptation:
Section 171 shall not apply to a Government Company in which the entire share capital is held by the Central Government, or by any State Government or Governments or by the Central Government or by one or more State Governments. – Notification No. G.S.R. 463(E) dated 5th June, 2015.