Every company must maintain certain statutory registers, and the register of members is one of the most important. It is a record of who owns the company and stands to benefit from its activities. As such it is vital to keep it accurate and up to date.
For companies with shares, which are the main focus of this article, ‘members’ and ‘shareholders’ are synonymous. So for these companies the register of members is also known as the register of shareholders. In company secretarial parlance they are often used interchangeably.
The register of members of a company limited by shares includes details of the shareholders who own the company and the shares they hold. It must include the following details:
Want to make it much easier to manage your UK company?
An important part of managing a UK company is keeping its statutory books and filings up to date. Inform Direct is the perfect tool to help make this task a whole lot easier.
- The name of each shareholder
- The contact address for each shareholder
- The number and class(es) or type(s) of share held by each shareholder
- The amount paid or agreed to be paid on each share
- The date each shareholder became a member of the company
- The date each shareholder ceased to be a member of the company (if applicable).
Some companies choose to record other information alongside the members register, like a shareholder’s email address or dividend mandate instructions. While it’s good to keep accurate information about shareholders, care must be taken here. Any shareholder and others can request to view the register of members, and it would not be appropriate for them to be able to see this additional information. It is therefore best practice to include only statutory information on the register of members (see the above bulleted list) and to keep their personal information elsewhere.
The register of shareholders shown below was produced using Inform Direct’s online company secretarial software. If this company were limited by guarantee rather than by shares, this document would be called the register of members.
Who should be listed as a shareholder on the register of members?
Usually it will be obvious who should be listed as the registered holder of shares, and most shareholders will either be an individual person or a corporate body. However, there are some rules around who can and should be listed as a member:
- When shares are held in a nominee account, the register should show the name of the nominee shareholder or company rather than the name of the underlying beneficial owner.
- Trusts or settlements should not be registered as holders of shares as they have no legal personality (the power to do things in law that a person can). Instead, it’s usual – both for pension schemes and other trusts – for some or all of the trustees to be listed as the registered holders.
- For the same reason, partnerships should not be listed as shareholders. However, a limited liability partnership has its own legal identity and so can be a registered shareholder.
- Joint holders of shares can be recorded. In this case, the register of members should state the name of each joint holder, but only one address need be shown.
- Holders of an office can be registered, as long as it is a public office (for example, the Official Receiver).
- If a company holds its own shares as treasury shares, it should be included in the register of members.
- Unexercised share options should not be listed on the register of shareholders.
One member or over 50 members?
There are particular requirements for companies with one or many members.
If a company has a single member, the members register must include a note stating that fact. The note should also be updated whenever a company ceases to have only one member. Conversely, for a company with multiple members, a note should be added when it becomes a single member company.
If a company has more than 50 members, an index of members’ names must also be maintained. However, a separate index is not required if the register itself is in an indexed form – for example, an electronic system where shareholders are listed alphabetically by name.
Who maintains the company’s register of shareholders?
The company’s officers – the directors and, where one exists, the company secretary – are responsible for maintaining the shareholder register. Where there are only a few shareholders, updates to the shareholders register will be infrequent.
For a company with a lot of shareholders, particularly if shares are transferred frequently, updating the shareholder register can be more demanding. Some companies may consider appointing a specialist company to act as registrar, thereby outsourcing shareholder administration. However, this usually comes at significant cost and the administration standards of registrars are, let’s say, ‘mixed’. Specialist company secretarial software such as Inform Direct is much cheaper and can ease the burden significantly.
When should the register of members be updated?
The initial entries in the register of members should be made when the company is successfully incorporated, including the names of the subscriber shareholders and the shares they have taken.
Thereafter, the register should be updated promptly when:
- New shares are issued (whether to a new or existing shareholder)
- The company’s shares are reorganised – for example, on a share split, share consolidation, share redemption, cancellation of shares, conversion of shares etc.
- When shares pass from one person to another, whether by a normal share transferor transmission when a shareholder dies
- A shareholder changes their name on marriage, by deed poll etc.
- A shareholder changes their address.
If someone ceases to be a shareholder, they remain listed on the register of members alongside the date they stopped being a member. An entry for a former member can, however, be removed from the register of members after 10 years following the date on which they ceased to be a shareholder.
Transactions like share allotments, share splits and share consolidations require a form to be filed at Companies House as well as an update to the register of members. While share transfers don’t require a form to be filed at Companies House, many of the details recorded in the members register will need to be included in the company’s next confirmation statement.
… it provides the primary (prima facie) evidence of who the shareholders of the company are
It is vital that the register of members be kept up to date. This is a requirement of the Companies Act 2006 and failure to keep the register updated means the company and its officers may be fined. Shareholders and others can request sight of the members register. If they do so, any inaccuracies will at the very least make the company look disorganised.
The members register is particularly important because it provides the primary (prima facie) evidence of who the shareholders of the company are and how many shares they hold. It even holds precedence over share certificates as proof of ownership. This has a few important consequences.
Firstly, a person only becomes a shareholder, and benefits from shareholders’ rights, when their name is entered into the register of shareholders. A prospective shareholder may have arranged to buy shares from someone else, paid for the shares and settled any stamp duty due, lodged a stock transfer form and received a share certificate from the company However, without his name being added to the register of members he is not yet a shareholder.
In the legal case of Glencoe Developments Ltd v. Sneddon (2012), the Court of Appeal held that the purported vote of a prospective shareholder to pass a resolution was invalid, because his name had not been entered into the register of shareholders. Without an entry in the register of members, a person is not legally a shareholder of the company.
Secondly, if incorrect entries are made in the register of members they can be difficult to correct, often requiring a Court Order. For that reason, it’s especially important to check the details of a transfer of shares are valid before updating the members register.
Where should the register of members be stored?
Traditionally, the register of members had to be available for inspection at a company’s registered office address or their single alternative inspection location (SAIL). In 2016, new regulations gave companies the option to choose whether to store their register of members locally or centrally with the registrar at Companies House.
Still later, in 2022, The Economic Crime and Corporate Transparency Bill 2022 (still going through Parliament at the time of writing) removes this choice. There is no longer an option to store the register of members at Companies House. It will be mandatory to maintain the register of members locally.
Use Inform Direct to create fully compliant, attractive registers and other documents with ease
This article was originally published in December 2015. The most recent update was on 21 February 2023.