8 - Membership

• The two ways that a person can become a member of a Company are:

  1.       The Subscribers of a Company are deemed to have agreed to become members

  2.       Agree to become a member of the Company and have their name entered into the register of members
• The directors decide whether a person's name should be entered into the register of members
• Section 113 of CA2006 - every company must keep a register of its members, although private companies may elect to have this membership data kept centrally at Companies House
• Failure to keep a register of members is criminal offense (section 113)
• A Company's register of members must be kept at the registered office or Single Alternative Inspection Location (SAIL).
• The register of members must include (section 113):

  ·         Names and addresses of each member

  ·         The date on which they were registered as a member

  ·         The date on which any person ceased to be a member

  ·         If the company has share capital:

  o   The number of shares the member holds (and class if applicable)

  o   The amount paid or agreed to be considered as paid for the shares

  ·         If the company does not have share capital but has different classes, then the class for each holding
• If the register contains an error, the company cannot rectify the error (Gardiner v Victoria Estates Co Ltd (1885)). Instead, the company must apply to the court for a rectification order which, under s. 125(1) of the CA 2006, can be sought if:

  1. the name of any person is, without sufficient cause, entered in or omitted from a company’s register of members; or

  2. default is made or unnecessary delay takes place in entering on the register the fact of any person having ceased to be a member.
• Any member of the company has a right to inspect the register of members free of charge. Anyone else may inspect the register upon paying a fee (s. 116(1)).
• The methods by which Company Law seeks to make corporate control more transparent are

  1. The Register of Interests Disclosed
  2. The PSC Register
  3. The Register of Interests Overseas
• An ‘interest in shares’ is defined extremely widely and includes ‘an interest of any kind whatsoever in the shares’ (s.820(2)(a)).
• Under section 793, a company can issue a notice to another party requiring them to confirm whether they have any interest in the company.
• Failure to comply with a s 793 notice is a criminal offense
• Part 21A of the Companies Act introduced the Persons of Significant Control Register
• A person will have significant control if any one of the following conditions are met (Directly or Indirectly):

  (a) holds more than 25% of the company’s shares;

  (b) holds more than 25% of the company’s voting rights;

  (c) holds the right to appoint or remove a majority of the company’s directors;

  (d) has the right to exercise, or actually exercises, significant influence or control over the company;

  (e)Trustees/Members of non-legal persons who would otherwise fit
• Concerns that foreign criminals were laundering money through the purchase of UK property led to the government proposing that a register of overseas entities be introduced, and this was finally implemented via the Economic Crime (Transparency and Enforcement) Act 2022.