What are Company Books?
Companies in the UK are required to create and maintain a collection of registers which are known as the Company’s statutory registers (or the Company/Statutory Books). Company Books provide evidence of a company’s history and constitution, and should contain accurate, updated and important information about the ownership, administration and corporate governance of any company. This blog highlights what Company Books are, why they are required and what should be kept with them.
What kind of registers need to be included in the Company Books?
There is a statutory obligation on each UK company to keep and maintain the following registers:
- register of directors;
- register of directors’ usual residential addresses;
- register of secretaries (if applicable);
- register of the company’s members;
- register of people with significant control over the company; and
- register of charges registered against the company (in respect of charges registered on or before 6 April 2013).
The Company Books may be kept in hard copy or electronic form (provided that they are capable of being reproduced in hard copy). They must be kept at the registered office of the company, or at a single alternative inspection address (such as your solicitors’ or accountants’ offices). It is also now possible for private companies to opt-in to keep their Company Books on an electronic central register maintained by Companies House, which requires a formal approval and notification procedure to be followed.
What other registers are there?
In addition to the above statutory registers, companies may also keep and maintain the following registers with their Company Books:
- register of transfers;
- register of applications & allotments of shares;
- register of directors’ interests;
- register of share certificates; and
- register of mortgages and charges.
As well as these additional registers, documentation such as the certificate of incorporation (and Form IN01), memorandum & articles of association, stock transfer forms and share certificates, board minutes, shareholders’ resolutions, statutory accounts and Companies House filings (including directors’ appointment and resignation forms) may also be kept with the Company Books.
Why are Company Books required?
It is very important to maintain up to date Company Books. Whilst many companies will regularly update their records at Companies House (which is also a legal requirement), updating the Company Books is often forgotten about. For example, as well as notifying Companies House of the changes to directors, the register of directors should be updated in the Company Books to record the change(s).
Many companies do not maintain (or in some cases, do not even have!) Company Books. However it is important to note that failing to keep and update the statutory records constitutes an offence, with any defaulting directors (and the company secretary, if any) being liable to receive a fine. There is also a separate statutory duty for the company’s officers to take adequate precautions to prevent any potential falsification of the Company Books. The Company Books should therefore be kept in a locked cupboard or at a location where only authorised personnel may have access.
When will I need my Company Books?
Whilst it is important to maintain all of the statutory registers, the register of members is particularly significant as this is the definitive record of who a company’s shareholders are. In order to become a legal registered shareholder of a UK company, details of the shareholder (and the number of shares owned) must be entered into the company’s register of members – until this process has taken place, the legal title to the shares has not yet technically been acquired by the shareholder.
For this reason, the register of members (and other registers within your Company Books) will require to be inspected as part of any diligence in relation to the sale of (or investment in) a company. If you are considering possibly selling your company, or looking to secure investment in future, it will be crucial to ensure that your company books are accurate and up to date. Doing so will help to avoid any costly delays in the transaction process, which may be caused by the company books requiring to be reconstituted and the negotiation of possible indemnities which may be requested by a potential buyer or investor due to the company’s failure to maintain accurate registers.