One of the most important responsibilities of a company secretary is to maintain the register of members. The register of members is what determines who the shareholders (or members) of the company are and, hence, who owns the company. In fact, if the register of members is not maintained properly, then a criminal offence is committed both by the company and every officer of the company (being each director, manager and the company secretary).
However, it’s not always as simple as it may seem to properly complete the register of members even with the best will in the world. One example of this occurs when you have a trust as a shareholder. The trust itself cannot hold shares; as section 126 of the Companies Act 2006 states that ‘no notice of any trust, expressed, implied or constructive, shall be entered on the register of members’.
So what should the company secretary do if a trust becomes a shareholder?
The answer is that the trustees should hold the shares in their own name but subject to the terms of the trust. So there is no mention on the register of members of the trust, but that does not affect the obligations the trustees hold under the terms of the trust.
There is one exception that we know of and that we recently had our attention drawn to. NHS foundation trusts are generally set up by statute and are not a trust in the traditional sense. They are a body corporate and therefore should be entered into the register of members as a trust and holder of shares.
This articles was written by Elemental CoSec who are experts in providing company secretary services. If you require any assistance with maintaining your company registers of any other company secretarial service then please get in touch with them.