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Handbook:Appendix 13: Identifying and tracing shareholders at your club

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Supporters' Trust Handbook
Introduction
Setting up a Supporters' Trust – The three-stage model
Stage One – Open meeting to introduce the Trust
Stage Two – Develop Working Group and Launch
Stage Three – The First AGM
Running a Trust
Organisation
Constitutional Issues
Fundraising
Marketing
Using the Media Effectively
Action in the Community
Shareholding, AGM, and Board Strategies
Contexts
Corporate Governance
Company Law
Codes of Corporate Governance
Regulation by the Football Authorities
Appendices
Appendix 1: Model agenda for the stage one open meeting
Appendix 2: Template application form
Appendix 3: Model board membership policy
Appendix 4: Model agenda for Trust AGM
Appendix 5: Model rules for Trust elections
Appendix 6: Sample election nomination form
Appendix 7: Supporters Direct funding policy
Appendix 8: Potential sources of funding from within the co-operative movement
Appendix 9: Some of the objects used by existing Trusts
Appendix 10: Media directory
Appendix 11: Taxation treatment of football community mutuals
Appendix 12: Code of conduct for elected supporter directors
Appendix 13: Identifying and tracing shareholders at your club
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The objective of this Appendix is to establish how a Supporters’ Trust can identify and locate existing shareholders in their club, with a view to acquiring their shareholding or proxies. The first step in this process is the identification of the existing shareholders. When this is done, an approach to them in an attempt to obtain their relevant shareholding or proxies can be made.

Identification of Existing Shareholders

The Companies Act 1985 sets out detailed rules relating to the accurate and proper recording of the details of shareholders of every registered company. Companies are required to record the identity of their shareholders in two ways, namely in the Annual Return and in the Register of Members.

Annual Return

The Annual Return is a snapshot of information about a company, its directors and shareholders.

The legislation relating to Annual Returns is contained in sections 363 to 365 of the 1985 Companies Act as amended. Section 363 requires every company to deliver an Annual Return to Companies House on a yearly basis, thus ensuring that accurate information, as at the date of that return, is centrally held and available for inspection.

The Annual Return must be signed by a director or a secretary to the company and must contain information including:

  1. The name of the company
  2. Its registered number
  3. The type of company, for example, public or private
  4. The registered office address for the company
  5. The name and address of the company secretary
  6. The name, address, date of birth, nationality and business occupation of all company directors
  7. The nominal value of total issued share capital
  8. The names and addresses of all shareholders and the number of shares they hold

A company with share capital must provide a full list of members on:

  • Its first Annual Return following incorporation
  • Every third Annual Return after it has provided a full list

The intervening two Annual Returns need only report changes to shareholder information that have taken place during that year – that is, shares transferred and particulars relating to shareholders who have become members, or who have ceased to be members.

Thus, to comply with Companies Act guidelines the latest ‘full list’ Annual Return together with any subsequent Annual Returns should show the position at the date of the last return with regard to the shareholders of the company.

This information can be obtained from Companies House by your Supporters Direct Development Officer.

Penalties for failure to complete the Annual Return correctly

If an annual return is not properly completed and/or forwarded on time to Companies House then the company, and every director, secretary or ‘shadow director’ is guilty of an offence and liable to a fine, on summary conviction, not exceeding the statutory maximum (from 1 October 1992, £5000).

Furthermore, a conviction after continued contravention carries a daily default fine up to one-tenth of this statutory maximum.

Please note that it is a defence for a director or secretary to show that he/she took all reasonable steps to avoid the commission or continuation of the offence, although it is not a defence to state that another person was required to make the Annual Return.

Register of Members

Detailed rules set out in sections 352 to 362 of, and Schedule 14 to, the Companies Act 1985 require every company to keep a register of the names of those who own shares in it. This register must show the names and addresses of every shareholder together with the number of shares held by each of them. The Register is the definitive list of the members of a company at any one time. Even if a member has purported to transfer his/her shares, until the transfer is duly stamped (by the Inland Revenue Stamp Office) and the Register has been updated, the legal ownership of the shares remains with the original member, and it is they who are entitled to attend and vote at general meetings. This register is thus of fundamental importance in giving publicity to the identity of the shareholders of the company.

The Register of Members, together with the latest Annual Return filed at Companies House should be the starting point of any investigation into the identity and location of existing shareholders.

Availability of the Information on the Register

As one purpose of the register is publicity, it must be readily available for inspection. It should therefore be kept either at the company’s registered office or, if it is to be kept elsewhere, a notice must be sent to the Registrar of companies specifying where it is to be kept.

The Secretary of State for Trade and Industry has made specific regulations setting out how share register information must be made available, namely the Companies (Inspection on Copying of Registers, Indices and Documents) Regulations 1991. Taken together with the inspection rights included in section 356 of the Companies Act 1985, these Regulations require the register to be available for inspection between 9 a.m. and 5 p.m on each business day (or in any event, for at least 2 hours during that period).

Existing shareholders have free access to the register, and non-shareholders may be required to pay a small fee (£2.50 for each hour or part thereof during which the right of inspection is exercised).

Any person can obtain a copy of the register. Upon receiving such a request, the company must dispatch a copy within ten days. Copying fees are: £2.50 for the first 100 entries in the register, £20 for the next 1000 and thereafter, £15 for every subsequent 1,000 entries.

Should you require a copy of the register of members, and if the relevant company is a private company, the enquiry should be addressed to the Secretary of the company. If the company is a public limited company, the enquiry should be addressed to the Registrar.

Accuracy of the Register

The Register of Members must be altered when any change of the membership occurs. Except in the case of companies whose shares are publicly traded, all alterations of the register require the authorisation of the board of directors and so will not always be made immediately upon the necessary information being communicated to the company.

Please note that there is no actual time limit within which the Register of Members must be amended following any changes. However, the company and every officer who is in default will be liable to a fine if they do not comply with the obligation to maintain changes as set out in the Companies Act.

Penalties for Failure to Accurately Update the Register of Members

Failure to comply with the various requirements relating to the proper maintenance of the Register of Members is punishable by fines, which may be imposed on the company and every officer who is in default.

Default is also a criminal offence that is punishable by imprisonment.

Rectification of the Register

The Register of Members can also be rectified by an application to court. The Companies Act provides a mode of rectifying the Register by application to the court in two classes of cases.

  1. Where the name of any person is without sufficient cause entered in or omitted.
  2. Where default is made or unnecessary delay takes place in entering on the Register the fact of any person having ceased to be a member.

Section 359(2) of the Act provides that the court can either refuse an application to correct the Register or order rectification. The court’s power of rectification is therefore entirely discretionary.

Application to the court can be made by any person, whether an existing member or not.

The procedure for making an application under the Act is initiated by the issue of a claim form pursuant to the Civil Procedure Rules. The application is normally made to the Companies Court, but may be made to any judge of the Chancery Division.

Please note that, due to the fact that rectification involves the commencement of court proceedings, it is likely to prove both time-consuming and costly. However, although this may be prohibitive, it does not necessarily render the exercise useless. In certain circumstances a complete overhaul of the Register may be the only mechanism available to obtain the correct details of the existing shareholders of a company.

Tracing Missing Persons Even if the names of shareholders identified from the Annual Return and/or Register of Members are correct, Trusts may be faced with a further problem of trying to locate the individual;

(a) because they have changed addresses and not informed the company or;
(b) they have died and the shares have passed to a beneficiary who has not informed the company.

There are a number of options available as to how to trace an individual, and the sources listed below should provide guidance.

The Electoral Register

By using the address attributed to the shareholders, the relevant electoral register could be searched. These can be found in local reference libraries or county record offices, and can help you establish how long a person lived at that address. The disappearance of a name from the register means that they have moved home, married or died.

Marriage Indexes

It may be worthwhile to search the General Register Office’s marriage indexes (at the Family Records Centre in London, or locally). The marriage certificates should have an address that you can check in the electoral registers.

Death Indexes and Wills

If you suspect that the person that you are looking for may have died, try checking the General Register Office’s Death Indexes. These can be seen on the ground floor at the Family Records Centre, but many county record offices and local libraries hold a set of the General Register Office’s indexes on microfiche. It is also worth trying the Indexes to Wills, kept at the Principal Probate Registry Search Room, First Avenue House, 42-49 High Holborn, London, WC1V 6NP.

Records of Name Changes

As most name changes are done by deed poll, through a solicitor, no centralised records are kept unless the change of name was enrolled at the High Court. (In recent years only a small proportion of changes have been enrolled).

Information about changes of names enrolled in the last five years can be obtained by writing to the Royal Courts of Justice, Room 81, Strand, London EC2. Enrolled changes in name over five years old are held by the Public Record Office, whose number is 020 8392 5200.

Traceline

Traceline is a non-profit making service providing assistance in tracing the whereabouts of persons in England and Wales. Should a person being sought have died, Traceline will advise how to obtain a copy of the death registration details.

Should the person be alive, Traceline may offer permission to forward a letter from you.

After identifying the location of the individual sought, Traceline will inform the individual that a letter is being held at the Traceline office. It is then up to the individual to decide on whether or not they want to establish contact.

It should be noted that Traceline predominantly acts in cases where individuals are trying to re-establish contact between family or friends who have lost touch, and will only act when it is clearly in the interests of the person being sought.

The Traceline fee is payable in two parts. The fee for processing of the application and a comprehensive search is £27.50. This is non-refundable in the event of an unsuccessful search. If the search is successful, the fee for offering to forward the letter is an additional £22.50.

Traceline is based in Southport and can be contacted on 0151 471 4811.

Incasso

Based in Leeds, Incasso is the Specialist Debt Recovery Division of Cobbetts Solicitors. Incasso offers a tracing service that operates on a no-success no-fee basis.

Incasso has the facilities to quickly search a number of databases in order to identify the location of an individual. The fee for establishing the location is £40, but this will be repaid in full should the trace prove unsuccessful. For further information on this service, please contact the Incasso Trace Manager, Simon Armitage on 0113 288 5228.

Conclusion

The first step to take is to obtain the most up-to-date full list of members held at Companies House. This should be considered alongside the print-out of the Register of Members obtained from the secretary of the individual company.

If the Annual Return is being completed correctly and the Registers of Members kept up to date, this will provide you with the information necessary to identify and locate the existing shareholders.

If however you suspect the information is not being correctly maintained, bearing in mind the relevant penalties, it is suggested that you write to the secretary of the individual companies, voicing your concern over the inaccurate information contained in the Annual Return and the Register of Members.

In addition to fully explaining why you want to obtain up-to-date information about the shareholders, the letter should remind them of their statutory duties to accurately record the names and addresses of the shareholders. You may also suggest that you are prepared to inform Companies House of their failures should they not update the Register and accurately complete the next Annual Return.

Should you feel that the names of the shareholders are correct but their addresses are wrong, or believe that someone had died, you should consider the use of the sources identified above with regard to the tracing of individuals.

The last course of action that should be considered is an application to court for the rectification of the register. As this could prove to be a lengthy and costly process, without any guarantee that the court will order the rectification of the register, it is suggested that it is used very much as a last resort.