Page 223 - DCOM404_CORPORATE_LEGAL_FRAMEWORK

Corporate Legal Framework

Notes (12) Section 205 delinks the depreciation from that under the Income-tax Act. The companies
must provide for depreciation at rates as given in Schedule XIV to the Companies Act.
Depreciation at rates higher than Schedule XIV may, however, be provided. Department
of Company Affairs has clarified that Schedule XIV rates represent the minimum rates at

which the companies should provide depreciation.
(13) The Companies (Amendment) Act, 2000 introduced certain changes in s. 205, 205A and

207. Also for the first time Companies (Amendment) Act, 2000 defined the term ‘dividend’.

It includes any interm dividend. [s.2 (14)]
The board of directors may declare interim dividend and the amount of dividend including
interim dividend shall be deposited in a separate bank account within five days from the date of

declaration of such dividend (s. 205). The dividend is required to be paid (within 30 days from
the date of declaration) in cash, by cheque or warrant or bank draft (s. 205A). For such non-
payment within the prescribed period, every director of the company shall, if he is knowingly a
party to the default, be punishable with simple imprisonment upto 3 years and also fi ve of ` 1000
for every day during which the default continues. Also the company shall be liable to pay simple
interest at the rate of 18 per cent per annum during the period the default continues (s. 207).
All the provisions of sections 205, 205A, 20, 206a and 207 shall be applicable to interim dividend
as well (s. 205).

10.6 Inspection and Investigation

Inspection of Books of Account etc., of Companies

Section 209A provides that the books of account and other books and papers of every company
shall be open to inspection during business hours (i) by the Registrar, or (ii) by such offi cer of
government as may be authorised by the Central Government in this behalf.

The books of account include ledger, cash book, journal and vouchers, deeds, writings and
documents.
The place at which inspection may be carried out need not be registered office of the company.

The books of account are required to be kept either at the registered office of the company or at

some other place, after intimation to Registrar. Thus the books of account can be inspected at
such other place also.

Section 209A(2) requires every director, other officer or employee of the company to assist in
inspection. He is required to produce to the inspecting authority such books of account and
other books and papers of the company in his custody or control and to furnish him with any
statement, information or explanations relating to the affairs of the company as the said authority
may require him within such time and at such place as may be specifi ed.
Section 209 gives certain powers to the inspectors. These are: (i) to make copies; (ii) to place

identification marks; (iii) to exercise powers of civil courts with regard to (a) the discovery and
production of books of account and other documents, at such place and such time as may be
specified by him; (b) summarising and enforcing the attendance of persons and examining

them on oath; (c) inspection of any books, registers and other documents of the company at any
place.

Investigation

The Act, affords some protection to shareholders and creditors of a company by giving powers
to the Central Government in certain circumstances to investigate either (i) the affairs; or (ii) the
ownership of a company.

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