Archive June 2022
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A shareholder can be either an individual or a company. The rights of a shareholder vary depending on issues such as the company’s Constitution, Shareholder Agreements, type of shares, etc.
A company’s Constitution will spell out the type of authorised shares and specific rights attaching such as voting rights, dividend payments, etc. Unlike the Constitution which is a public document filed in the Companies Registration Office a Shareholder Agreement is private document. A Shareholders Agreement covers issues such as rights to shares, rights to nominate an individual to the Board of Directors, and funding.
When a company is incorporated Members appoint Directors to manage the company on their behalf. As and when the Directors approve and sign the Financial Statements they are then presented to the Shareholders at an Annual General Meeting. This is when Shareholders have an opportunity to question Directors on how they managed the Company during the year and what their plans are for future development.
If you are a Member / Shareholder make sure your details are accurately reflected in the Statutory Register of Members. Without your current details including your current home address the company has no way of contacting you which is much more likely going to be more of a loss to you then to the them.
The onus to ensure Statutory Registers are accurately maintained in a timely manner is a given but what happens if you make a mistake?
Mistakes happen and can usually be rectified. It is important to remember that if you have to rectify Statutory Registers you are more than likely going to have to rectify information already filed in the Companies Registration Office. (CRO).
Depending on what the mistake is and when it occurred you have to consider how to rectify it in a timely manner. For example, suppose you find a mistake today where in 2020 an allotment of 50,000 shares was incorrectly recorded as an allotment of 500 shares what do you do? There are a number of things to consider such as those outlined below.
Form B5 – form filed in the CRO noting allotment of shares. To amend the figure from 500 to 50,000 prepare and file a Form B42A.
Form B1 – Annual Return filed in the CRO which provides a snapshot of the company on a particular date. Check everything to do with the shares (share class, total number, and members) provided in each Annual Return filed from 2020 to date. If any of the information needs to be amended prepare and file Forms B1B for each of the relevant years.
Financial Statements – check if mistake impacts on financial statements. Financial Statements cannot be amended once they have been approved and signed by the Directors but, you should contact the Accountant/Auditor to notify them of the error so they can advise on what actions may be required when preparing the next set of Financial Statements.
Board Minute – it would be appropriate for the Directors to note at a Board Meeting that a mistake had been made and all necessary steps had been taken to rectify the situation.
I know the phrase “to err is human to forgive is divine” but there is no divinity when it comes company law. Sweeping a mistake under the carpet never works. Once a mistake has been identified take appropriate advice to ensure it is dealt with promptly and fairly.
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