Statutory Books? What Statutory Books!?
Pay the office bills, manage staff, chase invoices, provide top-draw customer service, pay more bills and somehow find time to enjoy the fruits of your labour. With all of this to balance on a daily basis, if you own or run a company, it may be easy to forget that not only do you need to file certain documents with Companies House, but you also need to make sure that your internal statutory books are kept up to date and are readily available for inspection by the public, shareholders and/or directors (depending on the register type) at your registered office.
Regardless of size or sector every company is subject to a statutory obligation under the Companies Act 2006 to keep a set of business registers, but many fail to do so or don’t see the importance of them.
However, by not maintaining accurate and up-to-date Statutory Books, you are putting your business at risk: the company and any officers found to be in default are guilty of a criminal offence and can be fined up to £5,000.
What are statutory books?
Statutory books are mandated by the Companies Act 2006 and they are essentially a set of registers which provide a historical and up-to-date record of all matters which affect a company. By law, these must contain:
• a register of members;
• a register of directors;
• a register of directors’ residential addressed;
• a register of company secretaries; and
• a register of persons of significant control.
It is also prudent to include:
• a register of applications for shares and allotments of shares;
• a register of share transfers; and
• a register of debenture holders.
What do statutory books look like?
In days gone by, the statutory or ‘company’ books were usually noble looking, leather bound folders, often with a layer of dust residing on the front cover to indicate the frequency with which they were updated. In these modern times, they can still reside in hard-copy format but are more commonly found as electronic files, which can be as simple as an excel spreadsheet (provided all of the required information is present).
What about board minutes and resolutions?
In addition to the statutory books, companies are required to formally document certain board decisions and shareholder decisions affecting the company. For some changes, such as changing the company’s articles, companies are required to send the written resolution authorising the new articles to Companies House, otherwise an offence is committed.
Board minutes and resolutions are typically stored with the statutory books and must be kept for at least 10 years.
Why should you ensure that your statutory books are kept up to date?
Whilst these statutory obligations can appear to be quite admin-heavy, it is of paramount importance to maintain clear and up-to-date records.
There is also a huge benefit to ‘getting your house in order’ in relation to potential acquisitions of your business. In the event that you are looking to sell your company in the future, statutory books will need to be handed over as a completion deliverable. Having your statutory books up-to-date and showing a clear picture of the company’s shareholding will potentially save a huge amount of time. If you are unable to remedy any gaps in the company books your potential buyer may request an indemnity for any potential losses they may suffer as a result of your incorrectly maintained files. Not only does this weaken your negotiation position but could eat away at your hard-earned sale profits.
In addition, failure to have up-to-date and correct information in your statutory books constitutes a criminal offence committed by the company and every officer who is in default and is punishable by a fine.
If you can’t confidently comment on the status of your own statutory books – you’re not alone. If excel spreadsheets could gather dust, today’s company books would be likely to resemble those of times gone by. But considering the detriment to your company and its directors in the event of breaching the Companies Act, why take the risk?
We recommend that you conduct an audit of the changes to your business from its incorporation and make sure that your company is legally compliant with the above obligations.
If you would like any assistance with your statutory books, board minutes or resolutions, we offer a comprehensive Company Secretarial Service, so please get in touch by emailing firstname.lastname@example.org or calling 01603 339044.
Please note: the content of this article is for general information only and does not constitute legal advice. Specific legal advice should be taken in any specific circumstance.