Moore Barlow Company Secretarial team have advised a client in a matter resulting in three court applications being granted pursuant to section 125 of the Companies Act 2006.
Background to the case
Our client came to us concerned that when she was ready to sell her three property investment companies in the future, the absence of each of the company’s register of members would adversely affect her sale such that it could result in a decrease in the potential purchase price or result in her having to give and sign an indemnity.
Our client knew that each of the three companies had always been family investment companies, passed down through generations. However, vital documentation to evidence this (such as board resolutions and stock transfer forms) were missing.
The three companies were incorporated in the 1960s. Whilst our client was able to find statutory registers for each company, each of these were entirely blank. The only paperwork available relating to the shareholding of each of the companies were the documents filed at Companies House.
We therefore had to work closely with the client to identify all of the historic professional advisers of each company and write to them to determine whether they had any evidence of the shareholding. Further, we had to contact Companies House and obtain, review and analyse all documents that had been filed since the incorporation of the three companies. Personal documents such as wills, grant of probate and marriage certificates were also obtained and analysed carefully. We had to track the shareholding of each company over six decades to evidence that our client was the legal owner of the shares in each of the three companies.
The Judge, who granted each of the court applications, commented that it was clear that the claimant’s solicitors had completed a “corporate archaeology” of each of three companies. The Judge was satisfied that that we had provided sufficient evidence that the claimant (and in one company’s case, her mother) was the only person entitled to be recorded on the register of members of each of the three companies.
The court orders were granted and the register of members of each company has now been written up to record our client as a shareholder. The client can therefore proceed with any potential sale in the future without any dispute as to who holds the legal title to the shares in each company.
Section 125 of the Companies Act 2006
The importance of the register of members of a company should never be overlooked, as in the eyes of the law, those persons entered a company’s register of the members are the people who are legally entitled to the shares in a company. In this sense the importance is akin to the title deeds to a property.
In the event that a company has not maintained a register of members, it has been lost or destroyed or it is incorrect, section 125 of the Companies Act 2006 gives powers to the court to rectify the register of members.
A court application under section 125 of the Companies Act 2006 can be made by the person aggrieved, any member of the company, or the company itself, in circumstances whereby the name of any person is, without sufficient cause, entered in or omitted from a company’s register of members, or, default is made or unnecessary delay takes place in entering on the register the fact of any person having ceased to be a member. Once a court order has been granted, there can never be any dispute as to the who holds the legal title to the shares.
How Moore Barlow can help
If you are concerned about whether the statutory books and records of your company are in existence, up to date, or accurate please do not hesitate to get in touch with the Moore Barlow Corporate team and we can discuss your options. Contact Moore Barlow.