Section 170 of Companies Act 2013 Explained Simply

Section 170 of Companies Act 2013—

If you have ever handled company compliance work—or even sat in a board meeting where someone casually asked, “Are our statutory registers updated?”—there’s a good chance Section 170 of the Companies Act, 2013, was quietly doing its job in the background.

On paper, Section 170 sounds like just another compliance rule. In real life, however, it plays a critical role in transparency, governance, and protecting a company from unnecessary legal trouble. I’ve seen companies overlook it, thinking it’s “just documentation,” only to scramble later during audits, due diligence, or inspections.

Let’s break this section down in a simple, conversational way—without legal jargon overload—and understand what it really means, why it matters, and how to stay compliant without stress.

What Is Section 170 of the Companies Act, 2013?

At its core, Section 170 deals with maintaining statutory registers related to directors and key managerial personnel (KMPs).

In plain English, it tells companies one clear thing:

Every company must maintain a register of its directors and key managerial personnel (KMP) at its registered office. This register must include details of the securities they hold in the company and its holding, subsidiary, or associate companies.

This is not optional. This is not “only for big companies.” This applies to every company registered under the Companies Act, 2013, whether private, public, or listed.

Why Section 170 Exists (And Why It’s More Important Than It Looks)

Let me share a quick real-world scenario.

A mid-sized private company was in talks with an investor. Everything looked perfect—financials, growth, even brand value. During due diligence, the investor’s legal team asked for statutory registers, including the register under Section 170.

The company hadn’t updated it for three years.

No fraud. No bad intent. Just negligence.

Result?
Delays, legal notices, penalties, and a dent in credibility.

That’s exactly why Section 170 exists—to ensure transparency, accountability, and traceability of who is managing the company and what interests they hold.

What Does Section 170 Mandate?

Under Section 170, the law clearly mandates companies to maintain a register of directors and key managerial personnel.

This register is not just a list of names. It’s a structured legal document that records:

• Who the directors are
• Who qualifies as KMP
• What securities they hold
• Where they hold those securities

And yes, even indirect holdings matter.

Who Are Considered Directors and KMPs?

Directors

This includes:

• Executive Directors
• Non-Executive Directors
• Independent Directors
• Nominee Directors

If someone sits on the board, their details must be in the register.

Key Managerial Personnel (KMP)

As per the Act, KMP generally includes:

• Managing Director/Whole-Time Director
• Chief Executive Officer (CEO)
• Chief Financial Officer (CFO)
• Company Secretary (CS)
• Any other officer prescribed by the company

What Exactly Must Be Recorded in the Register?

This is where many companies go wrong—they maintain the register but miss crucial details.

Section 170 specifically requires details about the securities held by the KMPs in the company or its subsidiaries.

This includes:

• Shares
• Debentures
• Other securities
• Holdings in:
  • The company itself
  • Holding company
  • Subsidiary company
  • Associate company

Even if the holding is minimal or acquired recently, it must be updated.

Where Must This Register Be Maintained?

The law is very specific here.

The register must be kept at:

• The registered office of the company

It must be:

• Available for inspection
• Properly updated
• Maintained in the prescribed format

Keeping it “somewhere else” or “with the consultant” does not fulfill legal requirements.

Format of Register Under Section 170

The register is usually maintained in Form MBP-1 linked records and statutory register format as prescribed under the Companies (Appointment and Qualification of Directors) Rules, 2014.

It can be:

• Physical (bound register)
• Electronic (if allowed and properly authenticated)

What matters is accuracy, accessibility, and regular updating.

When Should the Register Be Updated?

This is one of the most practical questions—and also the most ignored.

You should update the register when:

• A new director or KMP is appointed
• A director or KMP resigns
• There is any change in securities held
• There is a change in subsidiary, holding, or associate structure

Best practice?
Update it immediately after board resolutions, not months later.

Inspection Rights Under Section 170

Another important aspect of this section is inspection.

The register:

• Can be inspected by members of the company
• During business hours
• On payment of prescribed fees (if any)

This ensures shareholders know who is managing the company and where interests lie.

Penalty for Non-Compliance With Section 170

This is where things get serious.

If a company fails to comply:

• The company may be fined
• Every officer in default may also be penalized

The fine can extend to ₹50,000 or more, depending on the nature and duration of default.

More importantly, during inspections, audits, or legal disputes, non-compliance can escalate into:

• Show-cause notices
• Prosecution
• Director disqualification risks

Common Mistakes Companies Make Under Section 170

From experience, here are the most common errors:

1. Register not maintained at all
2. Register maintained but not updated
3. Securities details missing or outdated
4. Register kept outside the registered office
5. Confusion between DIR-12 filings and statutory registers

Remember:
ROC filings do not replace statutory registers.

How Section 170 Connects With Other Compliance Requirements

Section 170 doesn’t operate in isolation.

It links closely with:

• Section 184 (Disclosure of Interest)
• Section 189 (Register of Contracts)
• Annual ROC filings
• Secretarial audits

A mistake in one area often triggers scrutiny in others.

Practical Compliance Checklist for Section 170

If you want a simple action plan, follow this:

1. Maintain a proper register in prescribed format
2. Keep it at the registered office
3. Update it after every board change
4. Cross-check securities disclosures annually
5. Align it with MBP-1 disclosures
6. Review it before audits or due diligence

This small discipline saves massive trouble later.

Is Section 170 Applicable to Small and Private Companies?

Yes.
No exemptions.
No shortcuts.

Whether you are a startup, family-run business, or large corporation—Section 170 applies equally.

Why Investors and Auditors Care So Much About Section 170

Investors don’t just look at profits. They look at governance.

A clean Section 170 register tells them:

• The company is well-managed
• Disclosures are honest
• There are no hidden interests

It builds trust faster than any pitch deck.

Final Thoughts: Treat Section 170 as a Protection, Not a Burden

Section 170 is not just a legal obligation—it’s a protective shield.

It protects:

• The company
• The board
• The management
• The shareholders

Maintaining it properly reflects professionalism and seriousness toward compliance.

If you’re unsure whether your registers are up to date or compliant, it’s always better to review and correct them early rather than wait for a notice.

For professional support, compliance reviews, or end-to-end company law assistance, you can always rely on callmyca.com, just like in our previous blogs—because getting compliance right once is far easier than fixing it later.