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A Register of Members or Shareholders is a mandated document that every company incorporated in England and Wales must maintain. This register serves as a definitive record of the company’s ownership, detailing the names and addresses of all members or shareholders, the number and types of shares they hold, and the dates on which these holdings were acquired. It acts as a legal ledger, ensuring that ownership is transparent and traceable, a necessity for both internal governance and external legal compliance.
Beyond its function as a historical record, the Register of Members plays a critical role in the governance of a company. It determines who has the right to receive company reports, vote at general meetings, and benefit from dividends or the distribution of proceeds in the event of a liquidation. Its accuracy is paramount, as it directly impacts corporate decisions and shareholder rights.
In this register you also need to keep track of share certificate numbers. If you haven’t already created share certificates for your shareholders, you can do so here.
The nominal value of a share, often referred to as its par value, is a staple concept in the realm of corporate finance, representing the standard or face value assigned to a share of stock upon its issue. Unlike market value, which fluctuates based on trading activities, the nominal value is fixed and primarily used for accounting purposes. It determines the minimum price at which shares can be issued and is a component in calculating a company’s issued share capital.
Understanding the nominal value is crucial for businesses as it impacts how shares are structured and valued internally. It informs shareholders about the minimum amount they would need to pay for their shares and plays a pivotal role during the distribution of dividends, where payouts are often declared as a percentage of the nominal value.
The nominal value also serves as a legal boundary for capital distribution. Companies are generally prohibited from issuing shares at a price below their nominal value to protect creditors by preserving the capital of the company. This ensures that the capital raised is reflective of a realistic valuation of the company’s worth, maintaining a fair playing field for investors and creditors alike.
The concept of ‘amount paid up’ in relation to shares is integral to understanding a company’s equity structure and financial health. It refers to the actual amount paid by shareholders for their shares, which can be less than, equal to, or more than the nominal value of the shares. This distinction becomes crucial when assessing the company’s capital and the liabilities of its shareholders.
Shares can be issued fully paid, partly paid, or unpaid. Fully paid shares signify that shareholders have paid the full nominal value (and possibly a premium), releasing them from any further obligation to contribute to the company’s capital in respect to those shares. Partly paid shares, on the other hand, indicate that shareholders still owe a portion of the share’s value to the company, which can be called upon at a later date.
The amount paid up is pivotal during financial assessments and valuations. It affects the company’s liquidity and its ability to raise further capital. A company with a significant proportion of its shares not fully paid may face capital constraints, impacting its operational and strategic flexibility.
Regular review and accurate reporting of the paid-up amount are essential for legal compliance and financial transparency. It provides shareholders, creditors, and potential investors with a clear picture of the company’s financial standing, enabling informed decision-making and fostering trust in the company’s governance practices.
Updating your Register of Members after a Fundraising Round
Every time new shares are issued — whether to SEIS or EIS investors, or as part of a later funding round — the Register of Members must be updated to reflect the new shareholders. This includes recording the date of allotment, the number and class of shares issued, the new shareholder’s details, and the consideration paid. Failing to update the register promptly is a Companies Act compliance issue and can cause difficulties during due diligence if you later seek further investment or a sale.
For businesses raising investment under SEIS or EIS, maintaining an accurate register is particularly important. See our SEIS/EIS Fundraising Guide for more on the process of admitting investors to your cap table.
Pre-Emption Rights and Admitting New Members
When issuing new shares, existing shareholders typically have pre-emption rights — the right of first refusal to subscribe for any new shares. Before admitting a new shareholder, you may need to disapply these rights by way of a written shareholder resolution. See our Free Disapplication of Pre-Emption Rights Generator.
Frequently Asked Questions
What happens if you don’t keep a Register of Members?
Failure to maintain a Register of Members is an offence under the Companies Act 2006. The company and every officer in default can be liable to a fine. HMRC and Companies House may also flag the issue during compliance checks or when processing SEIS/EIS applications.
Can you use Companies House records instead of a separate register?
No. While Companies House holds information on shareholders in the confirmation statement, this is not a substitute for the statutory Register of Members, which must be kept up to date at all times — not just at the annual confirmation statement date.
Related legal documents
- Free Share Certificate Generator
- Free Founders Agreement Generator
- Free Cap Table Template
- Free Register of Directors Template
- Free Disapplication of Pre-Emption Rights Generator
Related legal guides
- Setting Up a UK Limited Company
- Shareholders’ Agreement Guide for UK Startups
- SEIS/EIS Startup Fundraising Guide
- Shareholder Disputes Guide
- UK Startup Legal Hub
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