'I only need memorandum and articles'
At UKcorporator we often hear customers, who wish to incorporate a company themselves, say that they only need a memorandum of association and articles of association from us to proceed further. Sometimes the customers have obtained the Government forms (form 10 and form 12) relevant to company formation and believe they only need memorandum and articles of association in order to proceed to incorporate the company themselves.
But it is important to realise that to it is
not to keep certain registers etc. from the time the company is incorporated and substantial fines may be imposed. These registers etc. are usually kept in a folder often referred to as the ‘Company Register’. (UKcorporator provides these documents automatically.)
Apart from the fines,
the lack of a register of members, for example, can potentially affect the legal rights of the members of a registered company
. It is in the interests of members / shareholders who register a company, to have their names recorded, as such, in the register of members. This is because under the Companies Act 1985, the register of members is prima facie evidence of any matters which are by the Act required or authorised to be inserted in the register - section 361. Share certificates (which UKcorporator will also provide you) are also important from a shareholder’s perspective in proving ownership of shares in a registered company. Also, the subscribers of the company’s memorandum of association are deemed to have agreed to become members of the company, and on the registration of the company are required by law to be entered as such in the register of members of the company - section 22(1) Companies Act 1985.
Penalties for failure to keep certain documents usually found in the company register
As mentioned above, certain of the documents usually kept in the Company Register, are required to be kept by virtue of the Companies Act 1985. The Act provides
penalties for a failure to keep these documents
. In every case mentioned in the table below, the Act provides that
the company and every officer of it who is in default is liable to a fine and, for continued contravention, to a daily default fine
. The concept of continued contravention is explained further below.
Daily default fine for continued contravention
Default in complying with section 288 (keeping register of directors and secretaries)
Default in complying with section 325(1) (keeping a register of directors’ interests)
Default in complying with section 352(5) (keeping register of members and their particulars)
Default in complying with section 383(5) (keeping minutes of proceedings at company and board meetings, etc.)
(The relevant legislation with regard to the amount of the penalties is the Companies Act 1985, the Criminal Justice Act 1982, section 37(2) and the Magistrates Courts Act 1980, section 143.)
As regards ‘continued contravention’ mentioned above, this means that a person convicted of the offence after continued contravention is liable to a
daily default fine
; that is to say, he or she is liable on a second or subsequent summary conviction of the offence to the fine specified in Column 3 above, for each day on which the contravention is continued (instead of the penalty specified for the offence in the Column 2 above) - section 730(4) of the Companies Act 1985.