Share register & cap table

A guide to creating and maintaining share registers

Keegan Vivian-Greer

5m read

There are many ongoing requirements for companies to be compliant and meet local regulations. Alongside core company documents and financial statements, a company share register is a central record which needs to be created and managed for a company to remain compliant. Business owners, directors, and managers all need to understand what is required for their company’s share register- this guide for Australian and New Zealand companies will explain:

What is a share register?
Why is a share register required?
Consequences of not meeting share register obligations
What a share register needs to include
Maintaining a share register and updating regulatory bodies
Common gaps in maintaining share registers
The advantages of managing your share register online

What is a share register?

A share register (also known as a register of members) contains information about company shares and the shareholders (members) of a company. Specifically it details all of the shares issued to shareholders, so is a full history of the share transactions and ownership structure of a company.

A share register will only include information about a company’s actual shares, and not any convertible securities such as options. This makes it different from a company’s cap table which commonly includes convertible securities and often shows ownership details both before and after the conversion of these securities.

Why is a share register required?

Company share registers are required as an official record of all shares issued by a company and the shareholders who have received these shares. It is a legal requirement to have a share register as specified for Australian companies in the Corporations Act 2001, and for New Zealand companies in the Companies Act 1993.

In both New Zealand and in Australia, share registers are an essential component for company compliance, alongside other company records which include:

company constitution
any shareholder or member communications, emails, meeting notes, meeting minutes or resolutions
minutes from board and committee meetings
certificates issued by directors or officeholders
deeds
financial statements
records about assets and liabilities
general ledgers and journals
cash records
bank statements and loan documents
sales and debtor records
invoices and statements received and paid, and any unpaid invoices

Details and dates of any repurchase or redemption of shares and of any transfer of shares to and from each shareholder should also be captured on the company share register.

A share register is one of the key company records which is required for compliance.

Consequences of not meeting share register obligations

For companies, an outdated share register can cause major problems when undertaking key activities such as shareholder communications and voting, raising capital, or distributing a dividend.

There are also a range of penalties and actions which regulatory bodies can bring against companies who do not meet their share register requirements.

Consequences for Australian companies

The Australian Securities & Investments Commission (ASIC) is the regulatory body who administers the reporting and record-keeping requirements for Australian companies. In the event that a company has not met their legal obligations within the correct timeframes, ASIC can charge hefty late fees, and they may de-register a company if it has outstanding fees and penalties, or if they believe that the company has ceased trading.

In addition, a director who fails to perform his or her duties as a director may:

be guilty of a criminal offence with a penalty of up to a maximum of AU$200,000, or imprisonment for up to five years, or both
have contravened a civil penalty provision (and the court may order him or her to pay to the Commonwealth up to AU$200,000)
be personally liable to compensate the company or others for any loss or damage they suffer
be prohibited from managing a company.

Consequences for New Zealand companies

In New Zealand, the Companies Office administers New Zealand’s statutory registers, and is tasked with ensuring that companies update the required details with them to remain compliant. If this does not happen, the Companies Office will issue a formal warning or infringement notice, and company registration could be suspended or cancelled. The Companies Office has grounds to prosecute a company or the individual, and a significant breach can carry fines up to NZ$200,000 or imprisonment for directors who fail to meet their obligations. Company directors can be prohibited or even disqualified from managing companies.

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What a share register needs to include

A common mistake which companies make is thinking that the information held by regulatory bodies is a fully compliant share registry, when it may be missing information that companies need to capture and maintain.

What Australian companies need to include on their share register

Australian companies need to include the following information on their share register:

member name and addresses
the dates on which entries on the register are made
the number of shares in each entry
the total number of shares held by each member
whether the member is holding the shares for its own benefit (beneficially held) or for the benefit of others
the class or classes of shares
the share numbers (if any), or share certificate numbers (if any)
whether the shares are fully paid (including the amount paid or unpaid on the shares).

What New Zealand companies need to include on their share register

New Zealand companies need to include the following in their share register at a minimum:

the number and types of shares every shareholder owns. (As a comparison, the Companies Office register currently only includes details for the 20 largest shareholders, and does not record different share classes/ or types).
all shares issued by the company and the shareholder details
details and dates of any repurchase or redemption of shares for each shareholder
details and dates of any transfer of shares by each shareholder
an alphabetical list of the shareholders’ names with their residential addresses or registered office (if they are a company)
any restrictions or limitations on the transfer of shares and where to find these details.

Australian and New Zealand companies need to include a number of details in their share registers- all of which need to be updated and maintained.

Maintaining a share register and updating regulatory bodies

Companies need to ensure that when they make updates to their share register, they let the relevant regulatory authority know within the required timeframes.

What Australian companies need to let ASIC know

Australian proprietary (private) companies need to advise ASIC on share register changes including the below:

any changes to member details
if the company has more than 20 members, then the company must tell ASIC of any changes affecting the top 20 members in each class of share
when a person in the top 20 members of the company transfers their shares to another person, increases or decreases their shareholding, changes their shares from beneficially to non-beneficially held (or vice versa), or increases the amount paid on their shares
when the company cancels or issues shares, and the details of the members who were allocated shares and the shareholding for each member
when the company makes changes to the share structure including share classes, preference shares, and shares issued for non-cash consideration under contract.

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What New Zealand companies need to let the companies office know

New Zealand companies need to advise the Companies Office on key changes including:

company name or address changes
shareholders' personal details or shareholding changes
director's names, addresses or appointment status changes or appointment of new directors
adding, amending or removing a company constitution
share allocation changes- issuing shares (increasing the total) or purchasing shares (decreasing the total) in your company, and adding or removing shareholders from an allocation.

Common gaps in maintaining share registers

There are some typical changes which companies should be aware of which can result in their share register becoming out-of-date and incorrect. Address and email changes require share registry updates

When people move house, they usually remember to update utility and telecom companies with their new details, and to arrange a post re-direct service. However, they often forget to let any companies in which they own shares, know about the address change. For a public company, a registry service provider can coordinate address changes, but for private companies, it is the responsibility of the company to update their register, so they are relying on shareholders to notify them.

The situation is similar for email addresses- if the shareholder has used a business email address and they change jobs, or if they change their email provider, then they need to let the company know so that the share register can be amended. It is useful for companies to include a reminder in any stakeholder communications for investors to check that their personal details are up-to-date.

Share class and details need to be correct on the register

Maintaining seemingly small details like share classes, rights, and restrictions on a share register are necessary. These can make a significant difference to the eventual return that an investor receives, so having clear descriptions for each of these is critical so that they can be maintained accurately.

Share transfers must be captured on the share register

Most members in a private company will have purchased their shares directly from the company and signed an agreement when they did so. However, gaps may arise if they sell their shares to a new shareholder, as this transfer of shares needs to be managed and everyone’s shareholdings updated on the register. Many private companies are not equipped to effectively coordinate and record share transfers as the correct documentation needs to be completed, signed by each party, and returned to the company so that the share register can be revised.

Voting and resolution procedures and record have an impact on the share register

Due diligence by larger investors when they are looking at a private company will often include a review of annual general meeting minutes and important shareholder resolutions (such as the resolutions to issue new shares). If these resolutions haven’t been voted on by enough shareholders, it can potentially cause problems with the details in the company share register. It’s important for companies to record and document resolutions and votes in a way that can be stored and referenced for easy updates to the share register.

Orchestra's share registry product experience.

There are many advantages to managing company share registers online, including increasing engagement with stakeholders by enabling them to have full visibility of their shareholdings and relevant documents.

The advantages of managing your share register online

Many private companies manage their share register on a spreadsheet. However, there are a number of disadvantages when using a spreadsheet for a share register including manual inputs and formulas being prone to errors, multiple spreadsheet versions causing confusion and mistakes, and a lot of administration time and effort going into maintenance.

Moving to an online platform to manage a share register has many benefits. These include reducing errors and the manual administration of a company’s share register. Companies will also be better prepared for business growth and events such as capital raising, and it portrays a professional view for potential investors. An online share register can also give current investors more visibility of their details and relevant documents, and increase engagement with them through frequent and easy to manage shareholder communications. Stakeholders can update their own details online, including address and email, ensuring that the share register is correct and reducing this admin burden for companies.

An online equity management platform like Orchestra offers an easy way to ensure company and share register requirements are met. Company documents can be saved in an online document vault for stakeholders to access, and shareholder communications can be managed directly from the platform.