An unwritten service arrangement still needs a written record
For a company to which Companies Act section 190 applies, the registered office must hold a copy of a written service contract with its managing or whole-time director, or a written memorandum of the terms where the contract is not written. Members can inspect the copies or memorandum without paying a fee. Subsection (4) excludes a private company. This article addresses the ordinary applicable public-company case, checked on 24 October 2026; establish actual legal status and any special applicable modifications first.
A personnel file and a statutory service record are different controls
Map all MD/WTD arrangements, the executed documents, amendments and actual effective dates. A payroll record showing salary is not a substitute for a contract or memorandum setting out service terms. Where the arrangement is unwritten, record the actual agreed terms rather than inventing an execution date or retrospectively describing approvals as already obtained. The memorandum records terms; it does not cure a separate defect in their authorisation.
Include the material agreed components: role, duration, fixed remuneration, variable remuneration conditions, benefits, notice and termination terms, and operative changes. Reconcile conditional bonus language with the actual agreement. Do not describe a performance-linked amount as a fixed entitlement merely because an internal budget includes it. Keep old versions with a clear current version, so a member can understand the operative arrangement without relying on an obsolete offer letter.
Arrange free inspection of the relevant record
Section 190(2) concerns member inspection without fee. Verify the requester’s membership and provide access to the relevant statutory record. It is not a general public-access rule for every employee file. Nor should an arbitrary administrative charge be made a condition for that inspection. Do not confuse inspection with a different request for copies or import the fees and deadlines of another register without checking their legal basis.
Maintain a request log, the document/version made available, access arrangements and evidence of completion. Confidentiality handling should preserve the statutory right rather than remove core contract terms under a generic privacy label. A practical appointment system is an administrative control, not an invented statutory waiting period. Keep registered-office custody and actual accessibility in the compliance review rather than assuming a remote HR archive alone completes the requirement.
Keep record compliance separate from appointment and remuneration approval
The existence of a section 190 record does not establish compliance with appointment, remuneration, related-party, Board or shareholder requirements. Test those independently on the company’s facts. Likewise, the private-company exclusion from this section does not remove all employment documentation or corporate approval obligations. Under subsection (3), default under the stated record or inspection duties attracts a company penalty of ₹25,000 and ₹5,000 for each officer in default for each default. Identify actual defaults and officers through the proper process; do not automatically multiply penalties by pages, days or all directors.
Worked illustrations
These illustrations use fictional facts and expressly stated assumptions. Amounts are Indian rupees unless a different currency or unit is specified. They are independent examples, not findings about any actual client.
Illustrative example 1: Unwritten remuneration terms
Assume an applicable company’s genuinely agreed unwritten terms provide fixed pay of ₹1,50,000 monthly plus a conditional annual bonus capped at ₹3,00,000. Fixed annual pay is ₹18,00,000; the maximum stated package is ₹21,00,000 if the bonus conditions are met. Record both the terms and condition in the memorandum; ₹21,00,000 is not guaranteed fixed pay.
Illustrative example 2: Midyear amendment
Assume valid terms pay ₹1,00,000 monthly for six months and ₹1,20,000 for the next six. Annual fixed pay is ₹13,20,000. Keeping only the initial ₹12,00,000 annualised amount understates the current-year schedule by ₹1,20,000; retain the operative amendment.
Illustrative example 3: Free inspection
A member is asked for ₹500 to inspect the covered contract. Section 190(2) inspection fee is ₹0, so the requested ₹500 is not supported as a condition of that inspection. This does not decide a distinct copy-service request.
Illustrative example 4: One established default
Assume one default and two officers properly found in default. Company penalty is ₹25,000 and officer penalties total ₹10,000, combined ₹35,000. Do not impose the ₹5,000 amount on directors merely because they are on the Board.
Illustrative example 5: Officer count matters
For one established default with three officers properly found in default, officer penalties total ₹15,000 and the company-plus-officer total is ₹40,000. This is not a daily penalty calculation.
Illustrative example 6: Document completeness control
An applicable company has three covered service arrangements: two written contracts and one unwritten arrangement. It holds the two contract copies but no memorandum for the third. The control count is three required arrangement records, two available and one missing; the count is not itself a finding of multiple penalty defaults.
Ten-step verification table
| Step | Verification | Evidence to retain |
|---|---|---|
| 1 | Establish legal company status | Constitution and applicable exclusion review |
| 2 | Identify covered MD/WTD service arrangements | Appointments and service roster |
| 3 | Classify written versus unwritten terms | Executed contract or agreed-term evidence |
| 4 | Prepare the correct statutory record | Contract copy or accurate written memorandum |
| 5 | Reconcile operative amendments | Effective dates and version history |
| 6 | Check remuneration conditions | Fixed, variable and termination terms |
| 7 | Confirm registered-office custody | Document index and accessibility evidence |
| 8 | Provide member inspection without fee | Membership verification and access record |
| 9 | Review approvals independently | Appointment, remuneration and other required approvals |
| 10 | Track deficiencies and responses | Correction trail and default-specific legal assessment |
Sixteen practitioner FAQs
1. Does section 190 apply to private companies?
Subsection (4) excludes a private company; establish actual legal status.
2. Does an unwritten contract avoid the record duty?
No. The section requires a written memorandum of its terms in the applicable case.
3. Is a salary slip the whole memorandum?
It may omit substantial agreed service terms.
4. Must the record be at the registered office?
That is the location specified by subsection (1).
5. Who receives the statutory free inspection right?
Any member of the company under subsection (2).
6. Can inspection be conditional on an administrative fee?
The specified inspection is without payment of fee.
7. Is every employee’s contract covered?
The section concerns service contracts with managing or whole-time directors.
8. Does a memorandum validate missing approval?
No. Recording and authorisation are separate issues.
9. Should a conditional bonus be shown as guaranteed?
No. Preserve the actual conditions and distinguish the maximum from fixed entitlement.
10. What happens when terms change?
Keep the operative terms and amendments clear, with supporting dates and approval analysis.
11. Is a scanned HR file automatically sufficient for every duty?
Check registered-office custody, form requirements and actual accessibility rather than assuming compliance.
12. Does the section prescribe a daily inspection penalty here?
Do not invent a daily multiplier from its stated penalty wording.
13. Is every director automatically an officer in default?
Establish who is in default under the applicable legal test.
14. Does free inspection necessarily settle all copy-request rules?
No. Analyse a distinct copy request under its applicable basis.
15. Can privacy policies nullify the member’s right?
They should not be used to defeat the statutory access requirement.
16. What should an annual secretarial review reconcile?
Covered persons, operative agreements, memoranda, amendments, custody, inspection requests and separate approvals.
Conclusion
Keep a complete, current and accessible service record for each covered arrangement. Assess exclusion, inspection and authorisation as distinct issues rather than treating payroll documentation as the whole compliance file.