Having seen a recent an increase in new company incorporations with many companies having been incorporated post Brexit by UK parent groups we are receiving more queries around the legal requirements around the statutory books to be maintained for these companies.
Company registers are the official books kept by a company relating to legal and statutory matters and are often referred to as the statutory registers, combined registers or company books.
There is a legal obligation under the Irish Companies Acts for every company to have and maintain their company registers which is a responsibility of the Company Secretary. Failure to keep the registers correctly is a category 3 offence by the company and every officer of it who is in default. The company registers are however often overlooked and not reviewed and updated on a regular basis.
It is often only when there is a possible sale or a dispute within a company that the registers can suddenly become a priority which can lead to delays and issues between parties.
Questions about the whereabouts of the company registers and their status usually arise when a company is to be sold and the purchaser requests the registers in order to conduct the company secretarial due diligence as part of the sale process.
If the company registers have not been properly maintained, they will need to be reconstituted prior to the sale. Even if the registers were maintained, they should be reviewed as part of the pre-sale company health check to ensure that they correctly reflect the current position of the company to avoid unnecessary complications during the sale process.
If there are any deficiencies that cannot be remedied, the purchaser may require the seller to indemnify the purchaser for any loss they may suffer due to the statutory registers not having been properly maintained.
We frequently see that transactions in relation to the share capital of the company or changes in company officers have not been kept up to date in the registers of the company.
What are the registers each company must have?
Under European Legislation and the Companies Act 2014 there are seven mandatory statutory registers required to be maintained by all companies incorporated under the laws of Ireland.
- Register of Members pursuant to Section 169 of the Act
- Register of Directors and Secretaries pursuant to Section 149 of the Act
- Register of Directors’ and Secretaries’ Interests in Shares or Debentures pursuant to Section 261 of the Act
- Register of Directors’ Service Contracts pursuant to Section 154 of the Act
- Register of Directors’ Interests in Contracts pursuant to Section 231 of the Act
- Register of Instruments creating Charges pursuant to Section 414 of the Act
- Register of Ultimate Beneficial Ownership pursuant to Article 30 of the 4th EU Anti Money Laundering Directive
Many companies often have additional registers that, although not legally required, are very useful such as a register of sealing of documents.
Companies are also obliged by law to maintain minute books for the directors and shareholders’ meetings and other corporate documents such as written resolutions.
Register of members
The most important register is the register of members. The register of members shows past and present members and is evidence of who the current members of the company are and the number and classes of shares they hold.
This information is vital for conducting company meetings and passing resolutions, especially in companies with large numbers of members or where members change frequently. It helps to ensure that all decisions are taken properly and to avoids decisions made to be challenged in the future. If there is a dispute in relation to the company’s shareholding, the Court will ask to see the register of members as evidence of who the existing shareholders are.
Inspection and location of the registers
The registers should be kept at a company’s registered office address or its principal place of business or another place within the State. The registers shall be open to inspection by any member of the company without charge. The members of the company are also entitled to request a copy of the registers and a copy of the minute book of the members’ meetings.
It should also be noted that any other person may also inspect the register of members, directors and secretaries and disposable interests and request a copy of those registers (for a small fee).
The registers can be kept in paper or electronic format.
Rectification of company registers by Court Order
As mentioned above any person has a right to request to view the registers of a company.
If a person’s name is omitted from the register or entered without sufficient cause or the registers were not updated to reflect that a person ceased to be a member, the aggravated person may apply to the court for rectification of the register. The Court may then order rectification of the register and payment by the company of compensation for any loss sustained by any party affected.
If the company was sold, the seller could also face a claim for breach of warranty and associated damages in respect of the cost to the company and the purchaser.
It is important to note however that a company can rectify its registers without a Court Order. As soon as any omission or error has been identified, the company registers should be rectified.
How we can help
These issues highlight the importance of maintaining the company registers in good order which reflect the current company position from the outset when a company is first incorporated.
How Roberts Nathan can help – we can review and assist in an overall health check on your company registers and where necessary carry out a reconstitution, or rectification of the registers.