From 1 July 2016 Companies House has introduced a free new service:  you can elect that your Register of Members (as well as your Register of Directors and Secretaries) are held as public registers.  You can also choose to hold your Register of People of Significant Control as a public register with Companies House too.

Your accountant or solicitor may currently be holding these Registers for you and charging you to do so.  So why might you choose to keep these Registers with your advisers rather than going for a free Government service?

With Brexit on all our agendas now we may reflect on our friends in Greece and the cradle of democracy.  The Greeks outwitted the Trojans with the gift of a horse.  May our friends at Companies House feel us unkind if we decide to look this Government gift horse in the mouth?

For those with very simple affairs who are just starting a new company the free service may be worth considering.  However, for existing companies or those who expect to award shares to employees or investors, the answer is a resounding no.

Having a diligent adviser to keep you on the straight and narrow looking after your Statutory Registers will still be a wise move.  Whilst the Companies Act does not require it, good company secretarial practice involves not just a Register of Members but a Register of Allotments and a Register of Transfers.  Like other double entry book-keeping systems this acts as a check and a discipline to avoid book­‑keeping errors.  On a multiple transfer (one to many) or a multiple allotment a slip may occur.  A transposition of numbers or a rounding error can be made.

Good systems will also ensure that forms of application for shares are kept with the Register of Allotments.  They will also ensure that stamped stock transfer forms are kept with the Register of Transfers.

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You might be forgiven for asking who will ever want to see these?  If you have ever sold a company you will know that the diligent buyer’s solicitor will for one.  Whilst warranties and indemnities will be sought as to ownership and title to shares the well-advised buyer of your company will know that he could be at risk of an application for rectification of the register.  Shares may have been incorrectly transferred.  The buyer may be faced with an unexpected shareholder. His advisers may fear he has to chase you as seller for recompense.

So expect that the buyer of your company will be concerned if your Statutory Registers are in disarray.

Who else might inspect?

If your company goes into insolvent liquidation the liquidator and his lawyers will check that shares are fully paid.  If they are not you may receive an unexpected demand for payment.  Having a Register of Allotments with a form of application for shares that can be reconciled with a payment into your bank account may one day prove important.

Suppose too you are involved in a shareholders’ dispute.  In the old world of physical Registers possession of these books, thereby preventing entry of a disputed transfer, could be critical to control.  In the new electronic age trusted advisers who hold electronic registers will, de facto, avoid a rogue Director “taking control”.

Whilst you may have a cast iron legal claim to rectify the register that may not help.  There may be a time critical decision to be made or you may not have the funds to fight a dispute.

The public Register of Members just could be the thin end of the wedge for you and your precious company.  Why take the risk?

Please see Confusion piled on confusion giving you the background to this blog……