Statutory Books: Are You Sale Ready?
In accordance with the Companies Act 2006, all limited companies are obligated to keep and maintain a set of statutory registers that include (among others):
- a register of allotments
- a register of transfers
- a register of members
- a register of directors
- a register of secretaries
- a register of people with significant control
The obligation to maintain these registers are, in some circumstances, subject to statutory time frames. For example, an allotment of shares or transfer of shares must be entered into the company’s registers as soon as practicable and, in any event, within two months of the allotment or transfer taking place.
Perhaps unsurprisingly, given the little publicity that is given to statutory registers, most companies are unaware of this obligation and therefore either have no such registers or the registers they do hold are entirely out of date.
During the day-to-day business of any given company the failure to comply with this obligation is, in most instances, a fairly dormant issue. However, upon the sale of (or investment into) the company this issue gains far greater significance, most notably in the case of the company’s register of members. A company’s register of members is the primary evidence of who the shareholders of the company are and what shares they hold. Accordingly, a potential buyer of the company will expect to see this register (in addition to the other registers aforementioned), in a form that is accurate as at the date of the sale to ensure that they are both purchasing shares from the person who owns them, and that they are purchasing the percentage of the company’s shares that they are intending to.
Therefore, it is important that prior to the start of any sale process, the registers of the company are properly written up so that they are an accurate reflection of the company’s actual position. If the registers are not in such a position prior to the commencement of the sale they may, at the very least, delay the completion of the sale or the buyer may require that they are indemnified in respect of any issues that might later arise out of the statutory registers.
Our Company Secretarial team can assist you with the on-going maintenance of your company’s statutory registers and any rectification work that may be required to bring them up-to-date.
If you have any queries regarding your company’s statutory registers, please contact Sharon Percival or call us on 0345 070 6000.