All businesses know the importance of keeping accurate and up-to-date records. But when it involves statutory books, there is a legal imperative to get it right – and failure to do so could land you in hot water.
The Companies Act 2006 requires every company to keep their statutory books maintained and readily available for inspection. These registers and documents provide evidence of your firm’s articles of association and its history. They include:
- Register of members
- Register of people with significant control
- Register of directors and company secretaries
- Register of directors’ usual residential addresses
- Register of shareholders and their shareholdings
- Minutes of directors’ and shareholders’ meetings and resolutions
Your business may also have a copy of the register of mortgages and charges, along with registers of allotments and transfers. All of these statutory books and registers need to be kept current. That means that if there are any significant changes at your company, they must be amended immediately.
A company secretary will usually be in charge of making sure statutory books are properly maintained and be responsible for filing notices and statutory returns within the correct timeframe. Company records can be kept in hard copy or electronically. If you are keeping the records electronically, you should ensure the data is stored safely and securely.
What is the register of members?
The register of members is an essential part of your business’s statutory books. If your company is sold, the register of members will be comprehensively investigated. It provides a definitive record of the company’s past and present shareholders, and of anyone who is entitled to exercise legal rights relating to its shares.
When might you need to show your books?
Statutory books will be one of the key documents to be requested if a company is going to be floated on the Stock Exchange or sold. It can be costly and time consuming to re-create registers and could even hold up or prevent a sale.
Keeping your books current can also help with an exit strategy, simplify a change to your company’s management, prevent previously unidentified issues from escalating, and avoid delays.
Who can see your statutory books and records?
Anyone who wants to inspect a company’s register of members or register of person of significant control (PSCs) can do so by making a request. This must include their name, address, whether the information will be disclosed to any other person and, most importantly, the purpose for which the information is to be used.
The record must be available for inspection, either at your company’s registered office, Companies House online, or a Single Alternative Inspection Location (SAIL), which must be registered at Companies House.
What mistakes could be made?
Unfortunately, despite the legal requirement and importance of maintaining company registers, many directors and company secretaries are completely unaware of this corporate compliance obligation. Others simply forget to keep their registers accurate and up to date. Errors could include:
- Company records that do not match those at Companies House, because of changes in the nominal value of shares or because shareholders have moved
- Shareholders entered on the register of members before a stock transfer form is stamped for the payment of stamp duty
- A company entered onto the register of members following a share buyback, when there is a chance the shares could be cancelled immediately
What are the consequences of getting it wrong?
If you fail to keep your company’s statutory registers current, your business could be subject to penalties. The severity of these will vary on a case-by-case basis.
Remember, if you do not correctly file confirmation statements or accounts, your business is committing a criminal offence. This could result in your company being awarded a hefty fine, directors or LLP-designated members may be personally prosecuted in the criminal court, and your company could also be struck off.
How we can help
Offering an extensive review of your company’s statutory books, MSP’s bespoke FIT programme (intended for new clients only) ensures the complete accuracy and legal compliance of your documents.
Services may include:
- A review of all statutory registers ensuring information is identical with Companies House
- The tracking of share positions, from subscriber through to current position
- Specialised resolutions to identify problem areas
- Review of the company address records
A recent review pinpointed problems with subscriber shares where the correct documentation had not been prepared at Companies House. As a result, the shareholdings were incorrect. Fortunately, the business’s specialised FIT programme identified these problems early on, saving time and preventing delays.
Find out more about our FIT programme.