Don’t overlook the importance of your statutory books
If you operate your business through a private limited company, then you are required by law to maintain a number of registers containing key information about your company. Amongst other things, a compliant set of registers will contain important information about your shareholders, share transfers, your directors and any chargeholders.
These registers are often referred to as the “statutory books” and are usually maintained by the company secretary or, if the company has not appointed a secretary, then by some other person appointed by the company to take responsibility for ensuring they are up to date. The statutory books may be kept in paper form or electronically.
Why are they important?
Keeping up to date statutory books is important for a number of reasons:
- the Companies Act 2006 requires every company to maintain a set of registers and failing to do so is an offence under the Act punishable by a fine.
- companies are required by law to keep their statutory registers available for inspection. The company’s shareholders are entitled to inspect the registers upon request and without charge, while public access may be granted for a fee although certain registers can be kept confidential. A failure to make the statutory registers available for inspection is an offence under the Companies Act 2006 as is a failure to comply with a valid request to inspect the statutory registers.
- importantly, as the register of shareholders is the definitive authority as to who legally owns the shares, if it is inaccurate or missing then this can cause significant issues. If the register has not been drawn up correctly (or at all) then, before errors can be rectified or the register reconstituted, it may be necessary for the company to obtain the approval of the Court. Not only is this an unwelcome headache if the company is in the process of being sold or there is a dispute as to the ownership of the company, an application to the Court is likely to be expensive and time consuming.
- if you intend selling your company, then you are likely to be asked the question “Where are the company’s statutory books and are they up to date?”. Your lawyers will want to make sure the registers are up to date and, most importantly, that the individual shareholdings are properly recorded. Hopefully, you will know where your statutory books are located, but it's not uncommon to find that the registers are either missing or not up to date.
How can we help?
Even if you are not looking to sell your company, it is important to keep your statutory books up to date. If you are thinking of selling your company at some time in the future, or just want the peace of mind that your company’s registers are accurate and up to date, then we can carry out a review for you and advise you accordingly.
If you have any questions or would like to know more about how we may help you, please get in touch with Noel Ruddy or Mark Diamond.