All companies that are incorporated in England and Wales are required under the Companies Act 2006 (the “Act””) to keep certain legal and financial records.
In this post I consider 6 key legal record keeping obligations that all companies should adhere to or risk receiving a fine.
The Act states that all companies must produce and keep up to date the ‘Statutory Register’.
The Statutory Register is a collection of records relating to the company that should be maintained in order to provide a historical record of key legal matters relating to the company.
My own experience in advising companies over the last 16 years is that most small to medium companies to not adhere to this requirement. The simple reason is that they are not aware of the requirement.
Whilst it is an offence not to keep an up to date Statutory Register the reality is that no doing so only gives rise to an issue when a problem arises. This usually happens when a business seeks to raise money or complete a share sale.
At that point the investor or buyer will want to make sure that the record keeping obligation has been met. Bringing the Register up to date at that point can be time consuming, potentially costly and will certainly delay closing the deal. Not something a founder wants to happen.
In addition there is the possibility that the failure to maintain the Statutory Register comes to the attention of the authorities.
In that case the company will be liable to a fine of up to £5,000 and the directors of the company could potentially be banned from being directors. A potential disaster for any founder!
Statutory Register – What Records Need To Be Kept?
Under the Act a company must keep the following records in the Statutory Register:
- A list of all Directors (section 162);
- A list of all Directors’ residential addresses (section 165);
- A record of the company secretary (if the company has one) (section 275);
- A list of all shareholders (section 113); and
- A list of any Charges registered against the Company (section 876).
The sixth list that must be included in the Statutory Register is required under the Small Business Enterprise and Employment Act 2015.
Under this legislation a company is also required to keep a list of ‘persons with significant control’. That means a list of all shareholders that own, or control, more than 25% of the shares in the company.
Where Do You Keep These Company Records?
Traditionally these 6 company records would be kept in a physical document called the company’s Statutory Register (or ‘Company Books’) which was a hard copy register that had to be kept at the Company’s registered office.
Usually this was in the form of a loose leaf ring binder folder but the registers could be kept in an electronic format on a computer.
However since the Small Business Enterprise and Employment Act 2015 came into force it is sufficient to keep these records on the Company Register that is maintained at Companies House. You do this by sending the relevant notifications to Companies House using their prescribed forms.
How Long To Keep These Company Records?
A question that frequently comes up is how long do these company records need to be kept for? The answer is that they need to be kept for the life of the company.
If the company is dissolved at some point and removed from the Company’s Register (which is maintained by Companies House).
For more information on the legal obligations of a business see our detailed guide which provides a full breakdown of what you need to do to make sure your business is legally compliant.