Why should I care about the Company Books, does it impact me and what do I need to do?
It is a common misconception that where you make your filings at Companies House on time that your Company register is maintained and up-to-date. However, Companies House is the central public register only and is not the Company’s register, which is held in the Company Books, otherwise known as the Statutory Registers; but what are they and why are they important?
Company Books provide an essential historical record of the company and the filings at Companies House should reflect the position in the Company Books, not the other way around. In the same way it is a legal requirement to make filings at Companies House, you must also keep your Company Books up-to-date yet the maintenance of the Company Books is often missed.
Your Company Books must legally include the following:
- Register of directors, this is to reflect both when a new director joins and when a director resigns.
- Register of director’s residential addresses, this is confidential however must be maintained by the Company so that directors may be written to if needed.
- Register of secretaries, notes both incoming and outgoing secretaries.
- Register of the company’s members reflects the current and historic shareholding of the Company. It is also good practice, and common, for there to be a register for allotments and a register for transfers albeit this is not a legal requirement.
- Register of people with significant control required to be maintained since 6th April 2016 to show the persons holding 25% or more of the shares or otherwise having control of the Company i.e. by way of a Shareholders Agreement.
- Register of charges for any charges on or before 6th April 2013 (any charges after 6th April 2013, you are not legally required to hold in a register albeit it is still good practice to do so).
- Register of debentures holders (this is not legally required however it is good practice to hold this).
Also, to be held with the registers above should be:
- Copies of all director’s service contracts or memoranda of terms.
- Records of resolutions and shareholders’ meetings.
- Copies of documents relating to share buybacks.
- Minutes of directors’ meetings.
Neglecting to produce or maintain Company Books can lead to complications in the future and could have serious consequences.
It is a criminal offence to not keep the Company Books up-to-date committed by not only the Company but also the officers. The penalty of which can be an unlimited fine. There is the additional responsibility for company officers to safeguard against any falsification of the Company Books.
The Register of Members, also known as the Shareholders’ Register, reflects the legal title to the Shares and until a Shareholder is written up in the Register of Members they/it is not technically the legal holder of the Shares and in some cases where the Shareholding of the Company is disputed this can mean a Court Order will need to be sought to settle who owns the Shares.
When Shareholders seek to sell the Company or the Company is seeking investment the third party may undertake due diligence and one of the questions raised will usually be to review the Company Books. If these have not been produced, lost or not maintained they will then need to be made up to show the current position, called reconstituting the Company Books. This takes time and can raise concerns with the potential buyer or investor, diverting attention and excitement away from the core transaction.
The Company Books must be publicly accessible at the company’s registered office (or another address nominated by the Company, such as an accountant’s or solicitor’s firm). Nowadays, they are often produced or maintained electronically, however you can still find some companies with hard copy or formally bound Books. Essentially, the Company Books can be held in most formats provided they are readable and accessible.
It is important that you double check whether your Company has Company Books and that these are maintained. If your Company does not or if you are unsure if the Company holds and maintains Company Books, do not leave it until the last minute to reconstitute or update the Company Books.
For further advice on Company Books requirements, please contact the Corporate team on 01603 677077 or email info@spiresolicitors.co.uk.
No matter what your business’s legal needs our Corporate Team are here to help.
