Section 88: register of members, debenture-holders and other security holders

Introduction

Section 88 sets out the basic registers of a company’s security holders. The register of members must show each class of equity and preference shares separately for each member residing in or outside India.

For securities held with a depository, the depository’s register and index of beneficial owners count as the company’s corresponding register and index. A company whose articles allow it may also keep a foreign register outside India.

Key takeaways

Identify the registers required

Every company keeps a register of members, a register of debenture-holders and a register of any other security holders. The register of members separates each class of equity and preference shares held by each member residing in or outside India.

The form and manner are prescribed by the Companies (Management and Administration) Rules, 2014. The rules have been amended since 2014, so use the current text.

• India Code — consolidated Companies Act, 2013, section 88
• eGazette — Companies (Amendment) Act, 2020 (29 of 2020)
• eGazette — S.O. 4646(E), 21 December 2020 (commencement of Act 29 of 2020)
• eGazette — Companies (Management and Administration) Rules, 2014, G.S.R. 260(E)
• eGazette — S.O. 902(E), 26 March 2014 (commencement from 1 April 2014)

Index, depository records and foreign register

Sub-section (2) requires an index of the names in each register. Under sub-section (3), the register and index of beneficial owners kept by a depository under section 11 of the Depositories Act, 1996 are deemed to be the corresponding register and index.

Sub-section (4) allows a company to keep a “foreign register” outside India if its articles authorise it. The foreign register covers members, debenture-holders, other security holders or beneficial owners residing outside India and must be kept in the prescribed manner.

Penalty after the 2020 amendment

Section 17 of the Companies (Amendment) Act, 2020 replaced the original fine-based sub-section (5) with a civil penalty from 21 December 2020. The penalty is three lakh rupees for the company and fifty thousand rupees for every officer in default.

It applies where the company does not maintain a register or fails to maintain it in line with sub-section (1) or (2).

Practical preparation

List every class of security issued. Open the matching register in the prescribed format and keep the name index current. Reconcile physical holdings with depository beneficial-owner records. Check the articles before keeping a foreign register.

Practical checklist

Glossary

Register of members

The statutory record of members kept under section 88(1)(a).

Foreign register

Part of the register kept outside India under section 88(4) for holders residing outside India.

Frequently asked questions