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What is a Shareholder Register? Latest Guidance for 2022

This blog will run through everything that you need to know about shareholder registers and the key aspects that surround them in the UK.

Within, you’ll find answers to your burning shareholder register questions, including:

· What is a shareholder register?

· Are shareholder registers legally required?

· How are shareholder registers organised?

· Are shareholder registers connected to Companies House?

· Who can see your shareholder register?

We’ve written this blog today to provide you with an up to date summary of the shareholder register guidance in the UK for 2022. But why?

By guarding yourself with this information, you can be sure that your company will be compliant with its filings, and that you save a lot of your valuable time on research.

So, let's make sure you get your register right the first time!

First thing’s first…

What is a shareholder register?

A shareholder register is a list of all the active owners of a company’s shares. Shareholder registers are updated on an ongoing basis, as obviously, shareholders can change. Any updates to the register are made by the owner or director of the company. Shareholder registers require that every current shareholder is recorded on the list. The register includes information such as:

  • Each shareholder’s name

  • Their address

  • The date they became a shareholder (or the date they ceased to be one)

  • The class and number of shares owned and the price they paid for the shares

But is keeping this information up to date really that important? The short answer is yes!

Shareholder registers are essential as they allow for a full examination of your company’s ownership, which is vital for corporate transparency. Although it may seem like another bit of admin keeping you from growing and nurturing your business, the register can be a very important document.

Take if your company were being sold or you were transferring shares, for example. A buyer will want to review the register to make sure that your business has the authority to enter into the transaction. Any buyer of your company will ultimately also take possession of the shareholder register.

Shareholder registers in the UK can also be referred to as a register of members, while in the United States the shareholder register is called the shareholder list.

Are shareholder registers legally required?

Shareholder registers are legal documents in the UK, as required by the Companies Act 2006. This act makes it a statutory requirement for companies in the UK to maintain certain registers relating to the ownership and management of their company.

Under English law, a person is not considered to be a legal company shareholder until their details have been entered into the company's shareholder register.

Share certificates are commonly considered to be evidence of the legal ownership of shares. However, although share certificates are key documents that record share ownership, it’s the shareholder register that definitively proves a person's share ownership and not the share certificate.

Alongside the shareholder register, companies should also ensure they maintain an up to date record of stock transfers. This will record the journey that shares have taken to get to the current ownership. By doing so, they will make sure that the shareholder register can be used in future by auditors (or in a legal due diligence process) to confirm who the shareholders are.

This can be important as the information available about shareholders from Companies House isn’t always up to date. This is because shareholder confirmation statements only have to be filed once a year, making it easy for them to be essentially obsolete. This is a key reason why maintaining accurate shareholder registers is important.

How are shareholder registers organised?

The shareholder register is organised into share classes.

A share class is a phrase that describes differentiated company ownership. For example, your company shares may be described as Class A and Class B, with the difference being that they each have different voting rights in company matters. In practice, share classes can be much more complicated than this simplified example. Companies have several reasons for adopting structures like this, one is to protect themselves from takeover.

Under each class of shares, every shareholder is listed in alphabetical order by surname and an up to date address will be recorded for each person entered for contact purposes. As mentioned above, the history of share transactions and transfers may also be included, (or this might be maintained separately). The price paid by the owner for the shares will be included in the register. If money is still owed to the company in return for share ownership, the amount still due will be recorded here also.

This is yet another great example of why keeping up to date with this information is so important. The last thing you need is to leaf through correspondence in a hurry to find these details! Although this type of work relies on you keeping on top of the tasks, there are other ways you can save time…

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Are shareholder registers linked to Companies House?

As per the Companies House Act 2006, the shareholder register should be kept at the company’s registered office or other nominated location. But each year a copy of the shareholder register will also be provided to Companies House as part of the company’s yearly filings (or at the time of incorporation). The shareholder register information sent to Companies House must be a true reflection of the current state of the company in terms of share ownership.

However, as this information is only sent once a year, there are times when shareholder details will change. This only needs to be reported to Companies House at the time that you file your next annual confirmation statement. There’s no requirement to file an early statement unless you wanted to do so.

Any shareholders who qualify as a person with significant control is required to ensure that their current address is held by Companies House. Any minority shareholders are not required to have their latest contact details updated, however, which is good news for any company that maintains many smaller shareholders.

Who can see your shareholder register?

The right to inspect and take a copy of the shareholder register is covered in section 116 of the Companies Act 2006. Anyone can request to look at or obtain a copy of your shareholder register.

A current shareholder may freely inspect the register.

Likewise, a member of the public may request to view your register, and that request must include the reasons for the request and how the information will be used. Non-shareholders will be charged a prescribed fee for viewing or obtaining the register.

A company can accept or decline a request (through a court) but this decision on how to proceed must be made within five days. Declining a request would be done because the request was not for a “proper purpose”. Given the short timeline (5 days) to make a decision, a company should be mindful of what “proper purpose” actually means. Any legitimate request is likely to be granted as courts value good corporate governance and transparency.

If a company wishes to decline a request, they should be mindful of whether a court will determine the purpose to not be proper and how much the process of going to court will cost.

To help, non-binding guidance has been issued by the Institute of Chartered Secretaries and Administrators regarding the meaning of “proper purpose”. Recently, court cases have found that accessing the share register to:

a) Enable a member to lobby for the replacement of the board of directors.

b) To populate a database for the sale of services by the enquirer

c) to voice concerns about the directors.

Do not fulfil the “proper purpose” test.

As we mentioned above, you will only have 5 days to respond to a request so companies should plan how they would proceed should a request for the shareholder register be made. This will avoid a potential drain on management time and resources becoming an inconvenience. Failure to respond in time is a criminal offence and renders the company and the directors liable to a fine.

In summary

As with so many things in business, the challenges that come with a shareholder register are most prominent if it’s not correctly maintained. Once the register is established at incorporation, it’s far more straightforward to keep it up to date than it is to try and catch up each time you need it.

Remember that shareholder registers in the UK are a legal requirement and failing to provide them when requested can have financial consequences so it’s worth getting it right from the start.

If your company is likely to have multiple smaller shareholders, then your register could become complicated if you don’t keep on top of it. It’s likely that in the early stages of a company there will be numerous priorities and statutory registers would be easy to miss or neglect. This is where professional advisors can be useful, not only can they provide the expertise and guidance to make tasks like this simple, but they can also perform some of these tasks on your behalf.

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