Maintaining your Company’s Records
The introduction of the Companies Office website with the ability to update records online has led to the mistaken view that shares are transferred by updating these records. However, as has historically been the case, the Companies Act provides that a share transfer form signed by the transferor must be delivered to the company or its agent, and the transfer must then be entered into the share register (subject to certain exceptions). Directors have a duty to ensure the share register is properly kept and that share transfers are promptly entered on it and are liable to conviction and payment of a penalty if they fail to do so.
The Companies Office records are simply a public reflection of the share register, and updating these does not bring about a transfer. In fact, there is no requirement to update the Companies Office records to reflect share transfers until the next annual return for the company is filed.
The share register is one of the records that a company is obliged to hold and maintain. Others include an interests register (to record when directors are “interested” in transactions entered into by the company), minutes of all meetings and resolutions of both directors and shareholders within the last 7 years. If these records are not kept at the registered office of the company, notice of where they are kept must be given to the Registrar of Companies (within 10 working days). Failure to comply with these requirements renders both the company and its directors liable to conviction and fine.
Source: InBrief Spring 2017