Sections 227 and 228 of the Companies Act, 2013: Legal Advisers, Bankers and Investigation of Foreign Companies
Sections 227 and 228 form part of Chapter XIV of the Companies Act, 2013, which deals with inspection, inquiry and investigation. Section 227 protects specified privileged or confidential information from compulsory disclosure during proceedings under this Chapter, while Section 228 extends the Chapter's inspection, inquiry and investigation framework to foreign companies with necessary adaptations.
Section 227 - Legal advisers and bankers not to disclose certain information
Section 227 limits the disclosure obligations that may otherwise arise during inspection, inquiry or investigation under Chapter XIV. It provides that nothing in the Chapter requires specified information to be disclosed to the Tribunal, Central Government, Registrar or an inspector appointed by the Central Government.
Protection for legal advisers
A legal adviser is not required under Chapter XIV to disclose a privileged communication made to the adviser in that professional capacity. The statutory exception is the name and address of the client.
Protection relating to bankers
The bankers of a company, body corporate or other person are not required under Chapter XIV to disclose information about the affairs of their customers other than the company, body corporate or person that is the subject of the relevant provision.
Meaning and effect of Section 227
In practical terms, Section 227 creates a statutory boundary around the information-gathering powers contained in Chapter XIV. Investigative powers under the Companies Act are therefore not expressed as overriding every form of professional privilege or banking confidentiality. The protection is limited to the categories and circumstances stated in the section.
Section 228 - Investigation, etc., of foreign companies
Section 228 provides that the provisions of Chapter XIV apply mutatis mutandis to inspection, inquiry or investigation relating to foreign companies.
What does "mutatis mutandis" mean?
The expression generally means that the relevant provisions apply with the changes that are necessary to make them workable in the different context. Accordingly, the inspection, inquiry and investigation provisions in Chapter XIV are applied to foreign companies with appropriate contextual modifications.
Why Section 228 matters
Section 228 ensures that a company being a foreign company does not, merely for that reason, fall outside the inspection, inquiry and investigation framework of Chapter XIV. The particular power, procedure and obligation applicable in an individual matter must still be identified from the relevant provisions of that Chapter.
Relationship between Sections 227 and 228
Section 227 protects specified privileged and confidential information within the investigation framework. Section 228 extends that framework to foreign companies. Read together, the provisions show that Chapter XIV can operate in relation to foreign companies while remaining subject to the disclosure limitation expressly contained in Section 227 where its conditions are satisfied.
Official statutory resources
For the authoritative statutory text, see the Companies Act, 2013 published by the Ministry of Corporate Affairs. The Act can also be located through the India Code portal. For current corporate-law filings, notifications and regulatory information, refer to the Ministry of Corporate Affairs portal.
Related provisions in Chapter XIV
The surrounding provisions include Section 226 concerning the effect of winding-up proceedings on an investigation and Section 229 concerning false statements and destruction, mutilation or falsification of documents during inspection, inquiry or investigation. These provisions should be read with the specific investigation power or procedure relevant to the facts of a case.
Note: This page is a general legal information resource. Statutory provisions should be read with applicable amendments, rules, notifications and judicial decisions relevant to the particular facts.