One of the responsibilities of directors is to update shareholder information at Companies House when any such details change after incorporation. This information is displayed on public record, so it must be accurate and up to date to comply with the disclosure requirements outlined in the Companies Act 2006.
Companies House discloses the names and shareholdings of all company members (shareholders) on the public register. The first shareholders, who are known as ‘subscribers’, must also provide a service address (correspondence address). However, shareholders who join a company after incorporation do not have to provide any address details.
How to update shareholder information
If the details of any shareholders change after company formation, or a new shareholder joins the company, you must report this information to Companies House when you file your next annual Confirmation Statement (formerly known as an ‘Annual Return’).
There is no requirement to deliver a Confirmation Statement before the filing deadline unless you want to update shareholder information immediately. However, it is considered best practice to report changes to Companies House as soon as possible.
Do I need to tell Companies House if a shareholder changes address?
There is no need to tell Companies House if a shareholder’s contact address changes unless they are a subscriber and/or a Person with Significant Control (PSC).
Do I have to tell Companies House when a shareholder joins or leaves a company?
If a shareholder decides to leave a company or passes away, you must inform Companies House on the next annual Confirmation Statement. You will need to state the date on which the individual ceased to be a member. You must also report the sale (transfer) of their shares on the same Confirmation Statement.
If a new shareholder joins a company after incorporation, you must provide Companies House with their name on the next annual Confirmation Statement. If you choose to transfer shares from an existing member to a new shareholder, this information should also be reported on the next statement. However, if you decide to issue new shares to a new member, you will also need to file a ‘Return of Allotment of Shares’ at Companies House within 1 month of the allotment.
What happens if a shareholder dies?
The shares of a deceased shareholder form part of their estate. The executors of the deceased’s estate determine what happens to their shares. Whilst shares are most often bequeathed to family members, the company’s Articles of Association and shareholders’ agreement may contain restrictions on the transfer of shares.
Companies with multiple shareholders normally include pre-emption rights in the Articles and shareholders’ agreement, which stipulate that the remaining members have first refusal of the deceased member’s shares. This type of restriction helps to minimise disruption, protect members’ rights, and ensure the business continues to operate in its usual manner.
The family members of a deceased shareholder may not possess the required skills and knowledge to make important business decisions if they are unfamiliar with the affairs of the company. Therefore, their input and decision-making power could be detrimental to the future of the company. This is one of the reasons why shareholders’ agreements are so important.
It is wise to plan ahead for such eventualities to protect the interests of both your family and your company, ensuring a fair and advantageous outcome for all parties involved.