THE REGISTER OF MEMBERS

THE REGISTER OF MEMBERS

Every company is required to keep a register of its members and prescribes the contents of the register.

Contents

(kasneb cpa Company Law June 2011 Q4b – outline the details contained in the register of members of a company- 6 marks)

The register of members must contain the following particulars—

i.          the names and postal addresses of the members;

ii.         a statement of the shares held by each member, distinguished by its number if it has one;

iii.        the amount paid or agreed to be considered as paid on the shares of each member;

iv.        the date at which each person was entered in the register as a member; and

v.         the date at which any person ceased to be a member.

Where the company has converted any of its shares into stock the register shall show the amount of stock held by each member instead of the amount of shares and the aforesaid particulars relating thereto.

Failure to keep a register of members renders the company and every officer of the company who is in default liable to a default fine

Register of members shall be prima face evidence of the matters it contains.

Location

The register of members is kept at the registered office of the company. If it is made up at another office of the company, or at some other office, it may be kept at that other office provided the office is not at a place outside Kenya.

Index of Members

(KASNEB CPA COMPANY LAW JUNE 2013 Q3 – highlight five rules governing the maintenance of an index of register of members by a registered company 10 marks

Dec 2008 Q7a – Explain the circumstances under which a member’s name might be removed from the company register of members – 6 marks)

·         A company with more than 50 members must, unless the register of members constitutes an index, keep an index (which may be in the form of a card index) of the names of the members of the company,

·          Must alter the index within fourteen days after any alteration in the register.

·          The index shall in respect of each member contain a sufficient indication to enable the account of that member in the register to be readily found

·         Shall be at all times kept at the same place as the register of members.

Closure of Register:

A company may, on giving notice by advertisement in a  newspaper circulating in Kenya, or in that area of Kenya in which the registered office of the company is situate, close the register for any time or times not exceeding thirty days in each year. The purpose of this provision is to keep the register static so that members' holdings may be extracted as at a particular date for the purpose of computing dividends

Inspection of Register

The register and index of members shall during business hours be open to the inspection of any member without charge, and of any other person on payment of a fee, not exceeding two shillings for each inspection, as the company may prescribe. Any person may require a copy of the register or any part thereof, on payment of one shilling or such less sum as the company may provide, for every hundred words or fractional part thereof required to be copied. The copy must be supplied within a period of fourteen days commencing on the day next after the day on which the requirement is received by the company.

If a company officer refuses an inspection or fails to provide a required copy, the company and every officer of the company who is in default shall be liable in respect of each offence to a fine not exceeding sh40 and further to a default fine of sh40. The court may by order—

     (a)        compel an immediate inspection of the register and index, or

     (b)        direct that the copies required shall be sent to the person requiring them.

The court order may also be made against the company's agent who keeps the company's register of members if the company's failure to provide a copy, or permit an inspection, is due to his default.

Rectification of the Register

(kasneb cpa Company Law June 2010 Q4c – advice on the legal provisions which govern the rectification of the register of members of a company where the members name is missing from the register- 8 marks)

Section 118(1) empowers the High Court to rectify the register of members in two cases, namely—

i.          If the name of any person is, without sufficient cause, entered in or omitted from the company's register of members; or

ii.         Default is made or unnecessary delay takes place in entering on the register the fact of any person having ceased to be a member.

The application to the court to rectify the register may be made by—

                 i.          the aggrieved person; or

                 ii.         any member; or

                 iii.        the company.

Where an application is made the court may—

                 i.          refuse the application;

ii.         order rectification of the register and payment by the company of any damages sustained by any party aggrieved.

An order rectifying the register can be made even when the company is being wound up:

The court can also order rectification where a name stands on the register without sufficient cause.

The court may also order rectification of the register by deleting a reference to some of the registered shareholder's shares. It need not delete his name entirely.

If an order is made in the case of a company required to send a list of its members to the registrar, the court, when making an order for rectification of the register, shall by its order direct notice of the rectification to be given to the registrar.

Notice of Trusts

Section 119 provides that no notice of any trust, expressed, implied or constructive, shall be entered on the register, or be receivable by the registrar. The consequences of this provision are as follows:

a.         The company is entitled to treat every person whose name appears on the register as the beneficial owner of the shares even though he may in fact hold them in trust for another.

b.         The company is not a trustee for persons claiming the shares under equitable titles:

Branch Register

Section 121(1) empowers a company having a share capital, if authorised by its articles, to keep a branch register in any part of the Commonwealth outside Kenya of its members resident in that part of the Commonwealth. A branch register shall be deemed to be part of the company's register of members, which shall be known as the principal register, and must be kept in the same manner (s.122). The registrar of companies must be informed of the situation of the office where the branch register is kept within one month of its opening. A similar notice must also be given of its change or discontinuance.