What is a Register of Members?
Running a company is not an easy task. There are many responsibilities which you should handle. Keeping a register of members is one such responsibility which is handled by the directors and the owners of a company. If a company also issues shares, then in that case, the register of members is also called as the register of shareholders, as it contains the names of all the shareholders of the company. As per the laws, the register of members should be always present at the registered office of the company.
Nowadays, most of the companies are maintaining the register of members digitally. Earlier, before digitization became a trend, companies used to maintain their register of members in the paper form. Maintaining a register of members digitally is legally accepted as long as the digital records can be printed and converted into hard copy if required. Maintaining a register of members digitally is usually convenient and has a larger number of benefits over the physical counterpart.
What does a register of members contain?
A register of members, as the name suggests, is a register which contains the names of the individuals who have shares in the company or own the company. A register of members should also contain the following details:
- Name of the individuals who own the company or has shares in the company.
- Address and contact details of each owner/shareholder.
- Number of shares held by each individual and also the type of shares.
- Date of joining of the shareholders
- The amount which will be paid for each share to an individual and any amount if paid earlier.
- Date of leaving of any member( if applicable)
As per the laws, it is mandatory to record the above-given details in a register of members, but you can also have other details of members as well like personal information and contact details. While capturing the personal details of members in the register of members, it should be kept in mind that it is the right of the members of a company to view the register of members at any given time so it would not be professional if somebody’s personal information is registered on it.
What should be and should not be registered in the Register of Members?
There are some rules laid by government while maintaining the register of members.
- If another corporate body holds shares in your company then the members of that body should also be listed in the register of members.
- If the company’s shares are listed in a nominee account, then the register of members must enlist the name of the nominee.
- Trustees of the company should also be listed in the register of members.
- In a case where two individuals are joint holders of shares in the company, their names should be written separately in the register of members.
- A company’s treasury shares should also be registered in the register of members.
- Unexercised share options should not be declared in the register.
How does the number of members be noted down in the register of shareholders?
If your company has just one shareholder then it should be mentioned separately in the register of members. If the number of members exceeds or a member leaves the company then a special note should be added to the register.
When should the register of members be updated?
The register of members should be updated initially when you incorporate your company and should record the names of the shareholders at that time and the type of shares.
Following the incorporation, the register of shareholders should be updated on following events:
- If shares are transferred from one person to another normally or when a shareholder ceases to exist.
- If a shareholder changes his name or address.
- When a new shareholder is added to the company or when new shares are allotted to an existing member.
- When the company’s shares are reorganized, like on a share split, share redemption, share consolidation, cancellation of shares, conversion of shares etc.
If a shareholder leaves the company then his name shall remain in the register of members for ten years but a note along with the date of leaving should be included in the register. After ten years, names of the members who are no longer shareholders can be removed from the register.
Who should maintain the register of members?
Register of the members is an important statutory register and it is the responsibility of the directors of the company or the company secretary to maintain the register of members. If frequent share transfers take place in a company then the company can assign the work to a third party who will be responsible for maintaining the register of members. While outsourcing the task, make sure that the third part company is trustworthy and can handle the responsibility efficiently. In a small company, it is not a difficult task as there are very less number of shareholders.
Conclusion
Register of members is an important statutory register which is mandatory to maintain under The Companies Act 2006. Also, it is the sole source of the information about the shareholders of a company. Therefore, it should be updated correctly on a timely basis. The company shall be liable for a fine if discrepancies are found in the maintenance of the register of shareholders.