Share register & cap table

3 big mistakes companies make with share registers and stakeholder engagement

Luke Smith
Luke Smith

3m read

Company compliance and stakeholder management will very rarely be at the top of a company’s priority list. More often than not it will feel like a task that can be done ‘tomorrow’. Unfortunately, this approach may be hiding massive issues in historical shareholder data. The cost in terms of time and money spent with lawyers and accountants to fix these issues, will be significant for these companies.

Here are three big mistakes made by companies not keeping on top of compliance, share registers and stakeholder engagement.

1. Letting bad data be an excuse not to improve things

“My share register is not correct, I need to fix it before we move it online”

This is a common statement from companies who have struggled to go through historical shareholding records to reverse-engineer what is missing or incorrect.

Part of migrating to an online equity management system like Orchestra is for the software provider to complete an audit of this data. For NZ and Australian companies this means comparing it to the Companies Office or ASIC and filling in any blanks well before any investors or other stakeholders are invited to access information online.

Every day a company leaves its share register incorrect, or doesn't meet other compliance requirements including documentation and communications, they are just adding to the pain that they will need to resolve in the future.

Making the change to an online equity management platform means catching omissions or mistakes sooner rather than later before they get out of hand.

Download our Share Registry Legal Obligations Guide

2. Waiting for a big liquidity event to update information or stakeholders

Another common mistake is companies waiting for a big event before sorting out their register or compliance issues. This could be anything from waiting for a capital raise to close, through to acquiring a competitor.

It is tempting for companies to solve compliance issues once they are past a big junction in their business journey but companies run into problems when they go to complete the big action and realise there are calculation or disclosure issues with their data. This can add a lot of cost or embarrassment in trying to unpick historical issues.

If a company has already moved to an online equity management platform before the big event, it is also a way to show investors the professional manner they will be dealt with once they join the company.

3. Missing out on the extra benefit of engaged investors

For most companies, bringing private investors into the business is not just about cash – it’s also about accessing unique skills and experience and having a bunch of advocates pushing the company brand in the real world.

Yet for a lot of businesses that take private investment, very little is given back in return to investors due to lack of time, or not knowing what to share. The issue over time is that investors’ focus moves on to other things in life and the opportunity is lost.

If nothing else, allowing investors to access their shareholdings using a platform like Orchestra, and giving updates about the company will maintain engagement, creating a flow of benefits for the company, including making subsequent conversations about further investment easier.

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