Share Registers
A company’s share register, formally called its register of members, is a key statutory record. It records who the shareholders are, when they became shareholders, and the number and class of shares they hold.
Under section 168 of the Corporations Act 2001 (Cth), a company must set up and maintain a register of members. In practice, this means keeping the register accurate and current whenever there are changes to shareholders, shareholdings or share capital.
It is central to ownership certainty, voting rights, dividend payments and shareholder communications. If a register is inaccurate or outdated, it can create uncertainty about who owns shares, who is entitled to vote, and inevitably, disputes regarding the benefits derived from being a shareholder (such as dividend payments).
Common Problems with Poor Record Keeping
Issues commonly arise when share registers are not updated contemporaneously with changes. These problems often stem from missing or informal share transfer documentation, as well as inconsistencies between company records, ASIC records, and accounting records.
When there is a significant delay between changes occurring and the share register being brought up to date, the process of reconciliation becomes more complex and costly, often requiring extensive reconciliation, corrective documentation and late ASIC notifications.
These issues can create risk and avoidable disputes particularly during financing, restructures, shareholder disputes, exits or sale transactions. They can also complicate due diligence, delay transactions, and create uncertainty about who can validly sign shareholder resolutions or receive notices.
What a Share Register Should Include
A share register should include each shareholder’s name and address, the date they were added to the register, the number and class of shares held, and whether the shares are fully paid or partly paid. It should also record the amount paid or unpaid on the shares and any share or certificate numbers.
The register should be updated when shares are issued, transferred, cancelled, consolidated, subdivided or otherwise changed, or when a shareholder’s details change.
ASIC Notifications
Companies also need to notify ASIC of these relevant changes. ASIC records do not replace the company’s own register of members. The company must maintain its own register, and ASIC notifications should be consistent with it.
Risks of Not Keeping Records Updated
Failing to maintain proper and accurate records can have serious consequences. Outdated registers can result in miscalculated dividends, unpaid dividends, and disputes between shareholders and directors.
Tips for Managing Share Registers
The best approach is to update the share register at the time any change occurs. Companies should document every share transfer properly, including board approvals, transfer forms, consideration paid and supporting records.
It is also useful to keep a single source of truth for the register, use clear naming conventions for share classes and documents, and keep a complete record of supporting documents, back up records regularly and reconcile the register against ASIC and accountant records.
How M+E can help
Our Corporate + Commercial team can assist with maintaining accurate share registers, preparing valid share transfer documentation, and ensuring company law requirements are properly met. We can also work alongside accountants to keep ownership, tax and reporting records consistent.
Keeping share registers up to date reduces cost, risk and stress, and helps avoid major rectification work later.
For tailored advice, contact Ersel: ersel@morganenglish.com.au
