Have you noticed how the accounting and legal industries have a bizarre way of coming up with hundreds of different words that actually refer to the same thing?
It’s almost like accountants and lawyers invent exotic terms to bamboozle clients.
Think of the records you must keep about your business. Confusingly, they are referred to as company books, statutory books and statutory registers.
Yet company books, statutory books and statutory registers are three names for the same thing.
All companies have them.
All companies also have an obligation to update them regularly and notify Companies House of any changes made.
Yet not all companies understand what they are, what they need to do and why they are important. (We blame all the legal mumbo-jumbo).
That’s why we’re here to help and bust the jargon for you.
What are they?
Company books are basically official records and documents that contain all the key information about the company, such as its structure and operations.
They are public documents that must be available for inspection at all times.
Think of them as the company fact file.
What do they contain?
The typical contents of company books include:
- The register of shareholders
- The register of company directors and secretaries
- The register of company director’s interests and addresses
- The register of charges
- The register of people with significant control and their residential addresses
- The register of interests in shares
- Confirmation statements
- Share allotments and transfers
- Minutes of directors’ meetings
- Copies of shareholder resolutions and meetings
This information can now be contained in electronic form, as long as they are capable of being reproduced in a written format.
Why are they important?
If it’s not in the books, then it is not legally binding.
You may be a shareholder or a director, but you’re not a legal shareholder or director unless it’s on the register. In the event of any dispute over shares, shareholder meetings or resolutions, the company books have the official legal answer.
If you’re intending to sell your business, company books in disarray can cause delays, distractions and expense.
Any potential buyer will require a copy of the company books and request them to be reconstituted if they have not been properly kept. If you’re unable to fill in any gaps, a potential buyer is entitled to an indemnity for any losses they may suffer due to incorrect company books.
Unkept company books therefore make your business an unattractive, risky and onerous investment.
What do you need to do?
You need to keep them up to date and accurate.
If there is a change in directors, shareholders or any other key information that is contained in the company books, you must update them immediately and notify Companies House of the changes.
You must also formally document directors’ meetings and copies of shareholder resolutions and meetings, which then must be kept in the company books for 10 years.
In addition, each business is legally required to file an annual confirmation statement, formerly known as an annual return, which must be filed at Companies House and inserted into the company books.
Whilst this may all sound particularly boring and burdensome, you could be guilty of a criminal offence and fined up to £5,000 for failing to properly maintain your company books.
Who has responsibility for updating company books?
Generally, it is the responsibility of the company secretary to update the company books. Don’t have a company secretary? Then the responsibility to maintain the company books falls on the directors of the business.
Not sure how to manage your company books?
Let us look after the detail so you can focus on the bigger picture. We’re specialists in handling your day-to-day legals and can help you with any company books’ issues, whether you’re seeking to update them, reconstitute them or simply carry out an audit.