3309423 - SAP Business ByDesign - Companies Act, India, Rules 2014

• Manner of books of account to be kept in electronic mode; Inspection and copies of records maintained in electronic form; Storage of documents in a server physically located in India;
• A new amendment was released in August 2022 to store the details of the books of account. Reference link: https://egazette.nic.in/WriteReadData/2022/238055.pdf  
• Companies Act 2013, rule 29; Companies Act rule 3; electronic mode; back-up of the books of account and other books and papers

SAP Business ByDesign

Legally, it is required that the documents / back up must be stored in a server located in India.

With regards to the server, SAP will not be able to assist you, as we do not currently provide any physical servers to our customer for data storage.

You can contact SAP India consulting for a detailed discussion on how this can be managed.

Details of August 2022 Amendment:

The MCA notification is with respect to maintenance of books in electronic format in specific period given in the notification

The rule before : The books of account and other relevant books and papers maintained in electronic mode shall remain accessible in India so as to be usable for subsequent reference.

The Amendment : The books of account and other relevant books and papers maintained in electronic mode shall remain accessible in India, at all times so as to be usable for subsequent reference.

Some FAQs

1. Does a legal requirement exist that says that Indian companies have to store their data on a local server / to have a backup of their accounting in India?

        Answer: Yes

2. What kind of data falls into this requirement?

        Answer: Here, as per the legal notification the books of accounts are expected to be maintained in electronic or physical copy.

3. What is books of account and the details that comes under books of accounts?

        Answer: Definition of the terms “books of accounts” and “books and papers” as defined under the Companies Act 2013:

          2(13) of the Companies Act 2013: “books of account" includes records maintained in respect of:

1. All sums of money received and expended by a company and matters in relation to which the receipts and expenditure take place;
2. All sales and purchases of goods and services by the company;
3. The assets and liabilities of the company; and
4. The items of cost as may be prescribed under section 148 in the case of a company which belongs to any class of companies specified under that section;

         2(11) of the Companies Act 2013: "book and paper" and "book or paper" include books of account, deeds, vouchers, writings, documents, minutes and registers maintained on paper or in electronic form.

4. Please provide the legal text with the requirement (a law)?

        Answer: The law is provided as an attachment in this note. The requirement is highlighted in the document.

5. How to handle scenarios where service provider is outside India?

        Answer: The Rule 3(6) of the companies (Accounts) rules 2014 is for the service providers who maintain their servers outside India.

        where the service provider is located outside India, the name and address of the person in control of the books of account and other books and papers in India. “The additional requirement is for providing name and address of the person who has control over the books of accounts. “

6. Can we store the business data from SAP Business ByDesign to a local machine?

        Answer : Yes. Our recommendation is to use analytical reports such as G/L Accounts - Line Items, Journal and so on, which can also be accessed via the broadcast functionality (Business Analytics > Broadcasts) and should contain all necessary data, and customers should be able to schedule and store these locally. Related reference: Broadcasts Quick Guide

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