For ETL UK Partner Spotlight Series, Statutory Partner, Ian Saunders, highlights an often overlooked requirement of the UK Companies Acts.
As a Chartered Secretary, Ian specialises in the whole area of Company Secretarial work and has managed the Statutory department at Wilder Coe for the last 23 years. He understands the issues companies face handling the requirements of corporate law.
The Companies Act 2006 imposes various duties on the directors of companies in respect of record-keeping and the maintenance of registers. Some of the chief sections in this area are:-
- s.113 requirement to keep a register of members (shareholders)
- s.162 requirement to keep a register of directors
- s.165 requirement to keep a register of directors residential addresses.
- s.248 requirement to keep minutes of all meetings of the directors.
- s.790 requirement to keep a register of persons of significant control.
When taking on a new company, Ian and his team always request the existing registers and minute books to incorporate into the electronic system that Wilder Coe operates. On many occasions, the answer indicates that no such registers exist.
Many companies seem to rely on the documents filed at Companies House to form their corporate record keeping. Whilst the simplest of cases e.g. a sole director/shareholder company will allow the reproduction of the corporate registers at least, this will not solve the requirement to keep minutes, as even a sole director should record the decisions that they take on behalf of a company.
In more complex cases and where shares have been issued and transferred multiple times, the record at Companies House is often woefully inadequate to properly create the information required for a Register of Members.
These requirements are far from being arbitrary and theoretical. Upon the intended sale of a company, the due diligence exercise carried out by the potential purchaser’s solicitors will almost always involve a requirement to produce an up-to-date and accurate set of minute books and registers. Omissions and errors in these books will result in query and, on occasions, have delayed the sale of such companies. The last thing a busy board of directors needs at the time of a sale is to try to recreate the relevant registers from scratch.
A statement provided to Companies House in respect of the Persons of Significant Control is important and should reflect the information held in the relevant register. So important that the legislation introducing the PSC sections into the Companies Act 2006 even had the ultimate sanction of a potential prison sentence for deliberate misstatement.
The latest money laundering regulations also impose a duty on professional advisers to report to Companies House where their enquiries into the beneficial owners of a company show that the statement made is not accurate. Companies House has created a new PSC discrepancies department, which will challenge companies regarding such inaccuracies.
Ian advises clients of all sizes on company registers, proper record-keeping and the recording of minutes. He has dealt with all the complexities relating to share capital, classes of shares and share rights, the purchase of own shares, share capital reductions, memorandum and articles and necessary changes thereto.
Ian provides timely and relevant advice for businesses of all kinds.
If you or your clients require advice on company secretarial matters, please get in touch with Wilder Coe and speak to Ian on 020 7616 8852 or email at ian.saunders@wildercoe.co.uk
