The domestic inspection rule
Section 128(3) of the Companies Act, 2013 makes the company’s books of account and other books and papers maintained within India open to inspection by any director during business hours, at the registered office or another place in India. The entitlement is not confined to records physically stored at the registered office. The subsidiary proviso uses a different test: inspection is by a person authorised by a Board resolution. For the company’s own domestic books, do not turn that subsidiary requirement into a universal prior-approval condition. This article concerns domestic access, not the separate rules for overseas financial-information copies.
Read the applicable text: India Code: Companies Act, 2013, section 128(3)–(4).
Define whose records are requested
Identify the legal entity before arranging access. A holding-company director’s request for the holding company’s ledgers and a request to inspect a subsidiary’s books are different requests. Record the requesting person’s capacity and the entity holding each record. Separately check whether any alternative domestic storage location complies with section 128(1), including the Board decision and the notice to the Registrar within seven days; a storage-compliance question should not be used to narrow the inspection entitlement in subsection (3). A consolidated reporting pack may contain subsidiary figures without being the subsidiary’s complete underlying books. Producing the pack alone may therefore leave the requested scope unresolved.
Make the inspection usable
Section 128(4) requires officers and other employees to give reasonable assistance in an inspection under subsection (3). In practice, nominate a finance contact, arrange business-hours access and explain ledger codes, document references and opening-to-closing reconciliations. A locked file or unexplained extract is not a useful completion record. The practical arrangements described here are administrative controls, not additional statutory conditions imposed on a director’s entitlement.
Keep inspection and distribution decisions separate
The statutory text concerns inspection; do not assume it establishes an unrestricted entitlement to disseminate all company data to outsiders or to publish employee or customer records. Equally, confidentiality arrangements should not be used to substitute a blanket refusal for the domestic inspection requirement. Record any specific dispute over copying, redaction, privilege or third-party access and seek appropriate advice. This guide does not decide those issues through a generic access-policy clause.
Use a request-to-record matrix
For every requested book or paper, list the period, custodian, location, version, supporting documents and inspection outcome. Reconcile electronic extracts to the controlled ledger and indicate filters. Mark unavailable items and explain why, with a responsible person and follow-up date. Distinguish a temporary production gap from a conclusion that the company never maintained the record; neither conclusion follows automatically from a missing attachment.
Close access without declaring the accounts correct
Keep a factual record of what was inspected, queries raised, assistance given and items still pending. Availability does not establish accounting accuracy, and accuracy does not answer whether access was provided. A director finding a discrepancy should obtain a reconciliation and supporting records rather than treating every unexplained number as fraud. Conversely, a company should not require an endorsement of the accounts as the price of completing the inspection record.
Six worked illustrations
All facts and amounts are fictional. Calculations illustrate the stated assumptions, not a predetermined legal outcome.
Illustrative example 1: Requested books versus produced books
A director identifies 12 domestic ledgers for inspection and the company provides 9. Three remain outstanding. The completion record is 9 of 12, or 75%, with a separate explanation for each missing ledger. It is not a certificate of full access merely because the largest ledger was produced.
Illustrative example 2: An unreconciled supplier balance
The control ledger shows ₹25,00,000 payable, while the supplied supplier schedule totals ₹23,00,000. The ₹2,00,000 gap needs explanation through filters, unallocated entries or reconciliation. The arithmetic identifies a question; it does not by itself prove diversion, misconduct or an entitlement to publish the supplier list.
Illustrative example 3: Supporting-voucher inspection
A director requests supporting records for 40 identified transactions. Thirty-five vouchers are available, leaving 5 pending, or 12.5% of the selected population. Link each pending item to its ledger reference and custodian. Do not present this sample-completion percentage as a statistical opinion on the entire accounts.
Illustrative example 4: Subsidiary-authorisation coverage
A proposed inspection covers books of 3 subsidiaries. The documented Board authorisations produced cover only 2 of them. One entity remains outside the evidenced authorisation scope. Resolve the identity, wording and coverage of the required resolution rather than assuming a parent-company directorship alone closes the gap.
Illustrative example 5: Filtered electronic extract
The controlled account contains 10,000 rows for the requested period, but an extract contains 9,800 because a location filter excludes 200. The difference is 2% of rows. Supply the filter explanation and reconcile values; a row-count match alone would still not prove the extract contains the correct transactions.
Illustrative example 6: Opening-to-closing assistance
An account opens with a ₹2,00,000 debit balance, has ₹12,00,000 debits and ₹11,00,000 credits, and closes at ₹3,00,000 debit. The bridge is ₹2,00,000 + ₹12,00,000 − ₹11,00,000. Giving this reconciliation helps the director follow the book, while leaving the underlying transactions open to inspection and questioning.
Ten-step verification table
| Step | Action | Evidence |
|---|---|---|
| 1 | Identify the requester | Current capacity and the legal entity concerned. |
| 2 | Separate entity scopes | Own-company records and subsidiary records listed distinctly. |
| 3 | Locate the domestic books | Books maintained within India, inspection venue and separate section 128(1) storage-compliance record. |
| 4 | Define the requested period | Request-to-record matrix and relevant versions. |
| 5 | Arrange business-hours access | Practical inspection arrangement and finance contact. |
| 6 | Check subsidiary authority | Board-resolution text, authorised person and entity coverage. |
| 7 | Provide reasonable assistance | Ledger explanations, references and reconciliation support. |
| 8 | Track production gaps | Unavailable records, reasons, owners and follow-up dates. |
| 9 | Record questions accurately | Specific discrepancies and evidence requests without prejudgment. |
| 10 | Close the factual record | Items inspected, assistance given and unresolved matters. |
Sixteen practitioner FAQs
1. Can any director inspect the company’s domestic books?
Yes. Section 128(3) covers the company’s books and papers maintained within India, with inspection at the registered office or another place in India during business hours. Subsidiary inspection has the separate Board-authorisation proviso.
2. Does an individual director need the subsidiary proviso’s resolution for the company’s own books?
Do not transplant that separate proviso into the basic own-company domestic inspection rule.
3. Does this give access at any hour?
The statutory domestic inspection wording specifies business hours.
4. Are only accounting ledgers mentioned?
The provision covers books of account and other books and papers within its scope.
5. Does a parent-company directorship automatically settle subsidiary inspection?
No. Apply the subsidiary proviso and establish the requisite Board authorisation.
6. Can a consolidated pack replace all subsidiary records?
A pack is not necessarily the underlying subsidiary books. Match the actual request and legal basis.
7. Must employees help interpret the records?
Section 128(4) requires officers and other employees to provide reasonable assistance in the inspection.
8. Is a blank password-protected file sufficient evidence of completion?
It is not useful evidence that the requested records were meaningfully available. Resolve the access problem.
9. Does the Act prescribe the matrix used here?
No. The matrix is a practical control for documenting scope and fulfilment.
10. Can row counts alone verify an export?
No. Reconcile period, entity, filters, values and transaction identity too.
11. Is inspection an automatic right to public dissemination?
Do not infer an unrestricted distribution permission from the inspection text.
12. Can every confidentiality concern justify refusing inspection?
A generic concern should not be used to nullify the statutory requirement. Address the specific issue and obtain advice where needed.
13. Does a missing voucher establish fraud?
No. Record and investigate the gap before drawing a substantive conclusion.
14. Does a signed inspection record approve the accounts?
Keep its wording factual; inspection and approval are different matters.
15. Are overseas copy-request procedures covered here?
No. This guide is confined to domestic books and the subsidiary boundary in section 128.
16. What should remain after the meeting?
A dated scope record, evidence of assistance, questions, responses and a clear pending-items list.