An accurate Register of Members protects a society or a company from divisive, costly, and complex disputes. Conscientiously maintaining the register is good practice – here's our guide to how...
Keeping the Register of Members accurate
Whether a co-op uses a company structure or a society, it is vital that a register of members is set up and maintained as an accurate picture of the membership. In the case of a private company, that can be done, if all the members of the company agree, by maintaining a “central register” at Companies House rather than a register in either hard copy (book) or electronic form at the company or society registered office.
Co-ops are businesses that are owned and controlled by the people closest to them. Those businesses come in all shapes, sizes, and legal structures. It is particularly important to be clear about who the membership of the co‑operative is. In the case of one or more individual human beings, e.g. a sole trader operating in their own right, an unincorporated association or a general partnership governed by Partnership Act 1890 the position is less straightforward.
A company, registered society, or Limited Liability Partnership (LLP) which is a member of another company, society, or LLP can be the member itself as such bodies have “corporate personality” and so can hold property (e.g. one or more shares in the co-operative society or company limited by shares) and/or can be a member directly as a “legal person”, of a company without share capital such as a Company Limited by Guarantee (CLG). Registered societies, which include co-operative or community benefit societies, have shares and so holding one or more shares will be necessary for membership for both individual people and corporate bodies.
In the case of an unincorporated association or a business partnership formed by agreement between the partners without registration as an LLP, one of the association's members or one of the partners can become a member of a co‑operative set up as a company, society, or an LLP as a trustee or representative of all the other partners or members. It would be wise for the other members or partners to have some form of trust or contractual document setting out that the membership held by one of their number was held on behalf of that person together plus all the other members or partners.
In the absence of such a document, a court would be likely to find that the membership of the individual was held on behalf of the other individuals. Similarly, in the case of joint membership by more than one person, many governing documents provide that the person whose name appears first will hold the share and so be entitled to vote and attend meetings on behalf of the joint members. Co‑operatives considering joint memberships should consider these issues when drawing up their governing document or reviewing their memberships.
The Companies Act (CA 2006) provides that no details of any trust on which shares are held may appear on the face of the register and it may be best for both co‑op societies and co‑op companies to make it clear to members that the detail of the rights of joint members or partners among themselves (e.g. where a general partnership is the member) must be dealt with by their own arrangements and not by having more than one person appearing in the Register of Members as “joint members”.
CA 2006 explicitly provides (s 127) an initial assumption that the register of members is evidence of anything that is required or allowed to be recorded there. No such explicit provision appears in the Co‑operative and Community Benefit Societies Act 2014 (CCBSA 2014) but it is likely that the courts would treat register entries in a similar way.
The contents of the Register of Members
In both cases, the register must record:
(a) the names and addresses of members – but people can often hold shares as the nominee for someone else without disclosing the identity of the ultimate owner in the register;
(b) the date on which a person became or ceased to be a member; and
(c) a statement of the shares held by the member plus, in the case of a society, a statement of other property (such as loan stock) held by the member in the society. In a society register the information about the state of a member's share account need only be available to that member and not to other members.
Similar information about company and society officers must also be recorded in a register of officers.
It is vital that the register be kept up to date and that it records all the information required accurately. Failure to do so can amount to a criminal offence by the society or company whose register is not kept properly and by any officers responsible for that. Adequate precautions must be taken against the falsification of the register and to facilitate the discovery of any falsification that happens.
Who can access the register?
In the case of a co-op company, the register must be kept available at the registered office for inspection by any member of the company free of charge and by anyone else for a modest fee. Copies of all or part of the register can also be requested by any person (member or not) for a modest charge.
For co-operative and community benefit societies registered under CCBSA 2014, the right to inspect the register is open to any member of the society, except that the details of a member’s shares or other property in the society should not be available to inspection by other members.
An accurate register protects a society or a company from divisive, costly, and complex disputes. Conscientious maintenance of the register is thus a good investment of time and effort and the responsibility of the co‑operative’s secretary. Co‑operatives UK has a handy free guide to the roles and responsibilities of the co-operative secretary.