Under the Companies Act 2006, it is a legal requirement for the directors of a company to keep and maintain the registers of a company ie. statutory registers, that document essential information about a company’s structure. They are required to be kept at the company’s registered office or at a single alternative inspection location (SAIL address).
What registers must a company maintain by law?
As a director, the statutory registers that you have a duty to maintain and keep up to date, are as follows:
• Register of members - lists all the shareholders of the company and their shareholdings;
• Register of people with significant control - identifies individuals or entities that have significant control or influence over the company;
• Register of directors - contains details of the company’s directors, including their names, addresses, and other relevant information;
• Register of directors’ usual residential addresses; and
• Register of secretaries (if the company has one);
• Register of Charges – for charges created before 6th April 2013.
Although not required by law, a company may also choose to keep the following registers:
• Register of share applications and allotments; and
• Register of share transfers.
Why is maintaining these registers is crucial?
Legal Compliance
The first and most important reason is legal compliance. A failure to keep and maintain accurate registers is a criminal offence for the officers of a company and the company itself. Consequences can include an unlimited fine and a damaged reputation for both the company and its officers.
Transactions and Due Diligence
When preparing a company for sale or undertaking due diligence on a target company, it is vital that there is a record of ownership and the persons responsible for the company. In a share purchase, a buyer will request to see copies of the company’s registers as it will allow them to determine who holds legal title to the shares in question.
Protecting the Rights and Interests of Ownership
The register of members sets out who owns how many shares and what class in the capital of a company. It is a legally definitive guide as to who the shareholders of a company are, as legal title in shares does not pass until the name is entered into the register, regardless of whether there is a validly executed instrument of transfer and a share certificate.
What should you do if you do not have any statutory registers?
If you find yourself in a position where you do not have any statutory registers, they will need to be reconstituted. This process involves recreating accurate and up to date books using information which the company has kept a record of, and any information which is publicly available at Companies House. The members of the company will also be required to ratify and approve the directors’ actions in their failure to keep registers amounting to (or allegedly amounting to) negligence, default, breach of duty or breach of trust in relation to the Company. The members will also need to approve the reconstitution of the registers as though they had been kept from incorporation.
In the lead up to a major transaction, updating or completely reconstituting statutory registers can cause delays to completion and bring about significant costs. It’s therefore strongly advised from both a legal and commercial perspective to keep all required registers up to date and accurate.
If you require any assistance in updating or reconstituting the statutory registers of your company, please don’t hesitate to get it touch with a member of the BPE Corporate team.
