A cautionary tale: is your company’s register of members up to date?

Under the Companies Act 2006, every company registered in the UK is required to keep a register of its members.

Who are a company’s members?

A company's members are:

• the subscribers of its memorandum on incorporation; and
• every other person who agrees to become a member of the company, and whose name is entered in its register of members.

For companies registered with shares, the terms ‘members’ and ‘shareholders’ are referred to interchangeably, and the register of members shows who owns the company.

What information should be included in the register?

The register must include the following details:

• The name of each member/shareholder
• The contact address for each member/shareholder
• The number and class(es) or type(s) of share held by each member/shareholder
• The amount paid or agreed to be paid on each share
• The date each shareholder became a member of the company; and
• The date each shareholder ceased to be a member of the company (if applicable).

The register must be kept available for inspection at the company’s registered office, or at a single alternative inspection location (SAIL) located in the same part of the UK as the company's registered office. The responsibility of keeping an up-to-date register of members falls to the company’s officers (the directors and/or secretary).

What happens if you don’t update your register of members?

In the recent case of Bland and Anor v Keegan [2024] EWCA Civ 934, the Court of Appeal held that a company’s register of members was conclusive evidence of membership, notwithstanding an unauthorised transfer of shares.

JDK Construction Limited (the "Company") was incorporated with a share capital of 100 ordinary shares, all held by the Appellant, Jeanette Keegan, who was also the sole director of the Company.

The Company was controlled and managed by Jeanette's son, Darren. Darren's wife Julie later became a second director and acquired 50 ordinary shares in the Company by transfer from Jeanette. That transfer and appointment were reflected in electronic filings made at Companies House.

Darren and Julie's marriage broke down in early 2019 and Julie completed a stock transfer form purporting to transfer Jeanette's 50 ordinary shares to herself (such transfer was reflected in electronic filings made at Companies House). In 2021, Julie unilaterally passed a special resolution to wind the company up and to appoint joint liquidators.

Jeanette challenged the resolution, claiming that Julie had forged her signature. She argued that the effect of this was that the resolution was not validly passed and that the joint liquidators had not been validly appointed.

The liquidators issued an application under the Insolvency Act 1986 more than a year later on 6 October 2022, seeking a declaration that their appointment as liquidators of the Company was valid and/or for further directions. The respondents to that application were Jeanette and the Company.

The liquidators were not able to locate the company’s register of members, however, it was assumed that the register of members (wherever it was) reflected the filings that had been made at Companies House. The High Court granted the liquidators’ declaration. Jeanette challenged the decision in the Court of Appeal.

Applying the principle laid out by the Supreme Court in Enviroco Ltd v Farstad Supply A/S [2011] (that “except where express provision is made to the contrary, the person on the register of the members is the member to the exclusion of any other person, unless and until the register is rectified”) the Court of Appeal held that Julie was the sole member of the Company at the time the special resolution was passed and, therefore, the liquidators had been validly appointed (it is worth noting the Court of Appeal did not conclude that any forgery had taken place).

A cautionary tale

The judgment shows that, even if a transfer is made without authority, provided the company’s register of members reflects such transfer, the company and its members may rely on that register when proposing and passing any resolutions. It also serves as confirmation to third parties relying on information contained in a company’s register, such as insolvency practitioners, that even in the case of forgery, entries in a company's register of members are presumably valid, unless and until rectified (by court order for rectification of the register under section 125 of the Companies Act 2006). The case highlights the challenges which may arise where one person executes transfer documentation on behalf of another.

The case also underscores the importance of ongoing corporate governance and accurate record keeping.

If you require further information and guidance on the requirements for registers of members, or if you have concerns regarding unilateral decision making within your company, please contact the corporate team at Hamlins.