Secure compliance by the company

If any person who is responsible for keeping proper books of account fails to take all reasonable steps to secure compliance by the company with the requirement of law relating to the form and contents of the balance sheet, he is liable for each offence to imprisonment for a term extending upto six months or to a fine up to Rs. 10,000 or to both. However, no person shall be sentenced to imprisonment for any such offence, unless it was committed wilfully.
Prosecution against Directors cannot be maintained in absence of specific averment regarding non-existence of other persons mentioned in Section 209 (6) of the Companies
Act [Registrar of Companies Vs. S. Prashad (989) 59 Camp. Cas. 780 (Cal.)].
Can Approval of Annual Accounts be delegated? The Department of Company Affairs [vide its letter dt. 27.10.76] has clarified that in the absence of any specific provision in Section 215, the power of the Directors to approve the annual accounts cannot be delegated to a Committee of Directors or some of the Directors. It, inter alia, states that the approval of annual accounts which are to be ultimately placed before the shareholders of the company is not to be treated as a routine or part of day-to-day work. Hence, the Board of Directors must consider the annual accounts and approve them before the accounts are handed over to the Statutory Auditor of the company.
Circulation of Annual Accounts
Section 219 (1) requires that a copy of every balance sheet (including the profit and loss account, Auditors’ report, Directors’ report and every other document required to be annexed or attached thereto) which is to be laid before the annual general meeting of the company shall be sent, not less than 21 days before the meeting, to every member of the company. Besides, a copy each must be sent to every trustee for the debentureholders of the company and to all other persons so entitled.
However, a copy of the annual account, as aforesaid, need not be sent in the
following cases:
(i) To a member, or holder of debentures, of the company, who is not entitled to
have notices of general meetings of the company sent to him.
(ii) To a member or debentureholder whose address the company is not aware
In the case of a company whose shares are listed on a recognised stock exchange, the aforesaid documents need not be sent to members and trustees for debentureholders if the copies of the documents are made available for inspection at its registered office during working hours for 21 days before the date of the meeting and a statement containing salient features of the said documents in the prescribed form, are sent to the members and trustees for debentureholders at least 21 days before the date of the meeting.
Any member or debentureholder of a company, and any person from whom the company has accepted a deposit shall, on demand, be entitled to be furnished, free of cost, with a copy of the last balance sheet of the company and of every document required to be annexed or attached thereto, including the profit and loss account and the Auditors’ report [Sec. 219 (2)]. H default is made in complying with the demand within 7 days of its making, the company and every officer of the company who is in default shall be punishable with fine which may extend to Rs. 5,000. The Company Law Board may also direct that the copy demanded be furnished forthwith [Sec. 219 (4)].If default is made in complying with sub-section (1) of Section 219, the company and every officer of the company, who is in default, shall be punishable with fine which may extend to Rs. 5,000 [Sec. 219 (3)].