Prior to the Companies Act 2006 shareholder names and their respective interests in the company’s equity were listed on the incorporation memorandum and articles of association. In addition, any further issues of shares would require the new shareholders details to be denoted on the Companies House form.
Under the new 2006 act, the requirements shifted so that the numbers of shares held by an individual or corporate body in a UK company are no longer listed on the memorandum and articles of association. Their names are the only information which is stated and so it is not possible to readily discern from the documents who the majority shareholders are.
UK and foreign banks typically require such information to be given before granting business accounts to the company.
Under the Companies Act 1985 new allotments of shares permitted the company to state who the new equities were been given to. However the new regime does not provide this feature but merely records the fact the new shares have been issued.
Companies are then left with a problem of proving to third parties such as banks and even new shareholders that a new batch of allotted shares has been in fact distributed as they claim.
There are a number of ways of circumventing this issue but most will necessitate additional expenditure on the company’s behalf.
The first method is the issue of share certificates which are required by law and provide some evidence of the shares being issued to the new owner and the wider population who can view the company’s statutory books and records.
As share certificates are essentially an internal document, their presentation is not automatically recorded on any easily accessible public register.
The second option would be for the company to file and annual return early. The annual return is the only Companies House documents in which a full list of current shareholders and their stake in the company can be detailed.
This does carry some expense in monetary and time terms and depending on how often a company changes or add shareholders can result in a seemingly erratic filing history at Companies House.
A further extension of the above would be acquire a certificate of good standing which can state the current shareholders of a company together with their resultant interests. This would of course be dependant up on the relevant SH01 form being completed and the annual return being up to date and filed at Companies House.
The certificate of good standing is sometimes notarised and apostilled to further improve its authenticity and credibility.