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You’re my favourite

 

Len Goodman (Strictly Come Dancing)

Statutory Company Books – why bother?

Can I let you into a secret? Statutory company books are one of my guilty pleasures! I love seeing a set of corporate records that is accurate and up to date. It tells me a lot about the company that I am working with. It shows that, among other things, they understand the importance of getting the basics right. Equally, I love the challenge of unravelling and correcting a set of company books that has been neglected, turning them from being inaccurate and non-compliant into a thing of beauty. Inaccurate and non-compliant company books are often discovered when a company is trying to complete an investment round or sale and it inevitably costs them time and money to sort out (when time and money are often limited).

Failure to keep the statutory registers and records required by the Companies Act 2006 could result in the company or a director being fined (with such fine continuing until the fault is corrected). While a fine is less likely in small, owner managed, businesses it becomes more likely as you widen your shareholder base and bring third parties into your business.

If you are looking for investment in your company or preparing your company for sale, your statutory company books will be important as your investors or purchasers will want the comfort of knowing that the registers reflect the true position of the company at that point and you may be required to provide a warranty that the statutory company books are up to date and in good order.

It is therefore recommended that your statutory company books are in good order from the very start of your company’s life. And, if your company has been around for a few years, it is never too late to get into good habits and put your statutory company books in order; they must be maintained for the life of the company.

What are Statutory Company Books?

Every company is legally required to maintain statutory registers at either its registered office, a single alternative inspection location (SAIL address) or at Companies House. These registers are usually referred to as statutory company books. Statutory company books can generally be kept electronically (an excel spreadsheet or word document is sufficient) or they can be kept in hard copy. They must be kept in a form that enables them to be inspected in accordance with the Companies Act 2006.

  • Register of Members

    Every company must keep a register of members. This register must show the name and address of the members, the date each person was registered as a member and the date on which they ceased to be a member. For companies with a share capital, the register must also show the number of shares held by each member (and the number of the share if the share has a number), the class of each share and the amount paid or agreed to be paid on each share. If there is any doubt or dispute as to who the shareholders of a company are or the number of shares that a particular shareholder holds then the register of members is taken as being the accurate position. In addition, a shareholder does not officially become a shareholder of a company until they are entered into the register of members

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  • Register of Directors

    The register of directors is a detailed record of every person (past and present) who has been appointed as a director of a company. The register must show a director’s full name (including former names), service address, country where they reside, nationality, business occupation and date of birth.

  • Register of Directors’ Usual Residential Addresses

    Details of every director’s home address must be recorded. While some registers are available for public inspection, this register is kept private.

  • Register of Secretaries

    Most private companies (especially SMEs) no longer appoint secretaries, but any company that has, or previously had, a secretary must keep a register with the full name (including any former name) and service address of each company secretary.

  • Register of Persons of Significant Control

    This register contains information on every person who has had a significant interest or control in a company since 6 April 2016. The register must show, in relation to every person of significant control (PSC), the PSC’s name, service address, country where they reside, nationality, date of birth, usually residential address (which is kept private), date on which they became a registrable person in relation to the company, the nature of the PSC’s control over the company and whether there are any restrictions on using or disclosing any of the PSC’s details. The PSC register was introduced to help increase transparency over who owns and controls UK companies and will help inform investors when they are considering investing in a company. It will designed to support law enforcement agencies in money laundering investigations.

  • Minutes of all directors’ board meetings and shareholder resolutions

    The Companies Act 2006 requires that minutes and resolutions from both board and shareholder meetings must be kept for at least 10 years from the date of the resolution, meeting or decision. The records can be kept in hard copy or in electronic format (unless you are a company with Table A articles in which a hard copy form must be kept). All records must be capable of being reproduced in a hard copy form. Maintaining these records is not only a legal requirement, but also good corporate governance and it enables a company to track discussions and decision-making on a particular topic. With most documents now being produced and signed electronically and most SMEs being companies using the Model Articles, companies can keep an electronic file of shareholder and director resolutions, minutes and decisions. I would also recommend that if a company signs key documents relating to a board or shareholder resolution, decision or discussion that a copy of the document is stored with the minute, resolution or decision.

  • Register of Charges

    This register is no longer legally required for charges entered into after 6 April 2013 but I recommend that a company continues to maintain a record of any charges that it enters into (especially as these need to be registered at Companies House). Keeping these important legal documents in the statutory company books, even if a formal register is not kept, is good governance (and means that you will know where to find the documents if you ever need to refer to them!).

  • Register of Allotments and Register of Transfers

    As Len Goodman used to say on Strictly Come Dancing, “You’re my favourite!”. While a register of allotments and a register of transfers are not legally required to be included in your Statutory Company Books, I think they are two of the most useful registers to keep. They show, at a glance, the state of a company’s share capital by recording the shares that a company has issued and the shares that have been transferred. These registers sit alongside your register of members to track movements in your share capital.

  • Share Certificates

    While I have your attention, I wanted to add a quick note about share certificates. These are often forgotten once an investment round or transfer of shares is completed but it is a Companies Act 2006 requirement that share certificates must be complete and ready for delivery to each shareholder of your company within two months of the allotment or transfer. The Companies Act 2006 requires that certificates are ready for delivery and so it is common practice for share certificates to be prepared and then held in the statutory company books rather than being sent to shareholders. As mentioned previously, it is the register of members that provides conclusive evidence as to whether a person is a shareholder and the number of shares that they hold, but a share certificate is good evidence of a particular holding.

The Economic Crime (Transparency and Enforcement Act) 2022 and the Economic Crime and Corporate Transparency Act 2023 will, in the next year or so, bring changes to, among other things, how company books are kept. Many of these changes will remove the requirement for a company to keep its own statutory registers with all relevant information being held at Companies House. Having up-to-date and accurate records when these changes come into force will ease a company’s transition to the new requirements.

If you are concerned that your statutory company books aren’t up to scratch then now is the time to act. Get them in good order before you issue or transfer further shares, hold another board meeting or pass a shareholder resolution and before the new requirements come into force.

 

If you need help, talk to your My Inhouse Lawyer Principal (although, I can’t promise that everyone on the team loves statutory company books as much as me!).

Jennefer Francis My Inhouse Lawyer
Written Jennefer Francis
Principal at My Inhouse Lawyer

One of our values (Growth) is, in many ways, all about cultivating a growth mindset. We are passionate about learning, improving and evolving. We learn from each other, use the best know-how tools in the market and constantly look for ways to simplify. Lawskool is our way of sharing with you. It isn’t intended to be legal advice, rather to enlighten you to make smart business decisions day to day with the benefit of some of our insight. We hope you enjoy the experience. There are some really good ideas and tips coming from some of the best inhouse lawyers. Easy to read and practical. If there’s something you’d like us to write about or some feedback you wish to share, feel free to drop us a note. Equally, if it’s legal advice you’re after, then just give us a call on 0207 939 3959.

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