Meaning
Official records of a company provide the definitive record of ownership. A share register title is often considered the definitive proof of ownership in many jurisdictions, overriding possession of a physical certificate. The person named on the register holds the right to vote, receive dividends, attend general meetings and inspect corporate books.
This record-keeping function is usually the responsibility of the company secretary or a professional registrar.
Rectification Process
Errors in the books can be corrected through a court application if the company fails to update the records voluntarily. A share register title that does not match a signed transfer form creates a gap between beneficial and legal ownership. The court has the power to order the register to be amended to reflect the true state of affairs.
Transfer Timing
Movement of the legal interest occurs only when the register is updated. While a contract for sale binds the parties, the share register title remains with the seller until the board approves the transfer and the secretary makes the entry. This distinction is vital for determining who receives a dividend declared shortly after a sale.
Transparency Rules
Many regions require companies to make this information available for inspection by other shareholders or the public. Maintaining an accurate share register title helps prevent fraud and ensures compliance with anti-money laundering regulations. The register must include the name, address and the number of shares held by each member.
