To the letter – dealing with rectification of a company’s statutory registers

Whether attempting to rectify a minor error or to record a missing share allotment outside of the two-month registration period, people often ask whether a company’s statutory register can simply be updated at will. Whilst it is clear that maintaining an accurate register of members is a fundamental obligation for any company — and failing to do so is a criminal offence under section 113 of the Companies Act 2006 — there are statutory limitations on a company’s powers to amend its register.

As a general rule, companies are not permitted to unilaterally rectify their statutory books and must instead formally apply to the court for authorisation to do so. That being said, it is largely accepted under common law that a company director may rectify the statutory registers without a court order in cases where (i) there is no dispute, and (ii) the circumstances are such that the court would have granted rectification anyway. These situations, however, are typically limited to minor clerical errors, such as a misspelled address, and do not extend to more substantial amendments such as removing a person from the register.

The recent case of Jusan Technologies Ltd v Uconinvest LLC [2025] EWHC 704 (Ch) offers a cautionary example of such principles in action.

Rectification in practice: A case study

In this case, Jusan Technologies Ltd (the “Company”) sought to remove Uconinvest LLC (“Uconinvest”) from its register of members, arguing that the share transfer had been made in breach of the Company’s articles of association. Specifically, the articles required that a deed of adherence to the shareholders' agreement be validly executed prior to registration of any share transfer.

Following a share buyback from an exiting shareholder, the parties entered into a share purchase agreement to transfer the shares, held by the Company in treasury, to a new investor, Uconinvest. At the time, there was a shareholders’ agreement in place between the two sole shareholders of the Company which included an obligation to procure that no transfer of shares would be registered unless the transferee had executed a deed of adherence in the prescribed form. This requirement was also duly embedded in the Company’s articles of association.

Although Uconinvest, the Company, and one of the two existing shareholders executed the requisite deed of adherence, the second shareholder failed to do so. As a result, the deed did not become legally effective. Despite this, the Company nonetheless proceeded to update its register of members to reflect the purported transfer to Uconinvest.

Subsequently, the Company applied to the court under section 125 of the Companies Act 2006, seeking to rectify the register of members to remove Uconinvest’s name retrospectively. The Company argued that the transfer was invalid due to the improperly executed deed and was thus in breach of both the articles and the shareholders’ agreement. Uconinvest opposed the application, asserting that it had discharged all of its own obligations by correctly executing the deed itself, and that the failure of a single shareholder to sign should not render the whole transfer ineffective.

Uconinvest also relied on section 40 of the Companies Act 2006, which provides that “in favour of a person dealing with a company in good faith, the powers of the directors to bind the company, or authorise others to do so, is deemed to be free of any limitation under the company's constitution”. The Company countered that section 40 was not applicable in this instance because registering a share transfer is a unilateral act and does not constitute a “transaction” between the Company and the transferee.

The court’s decision

On the issue of the deed of adherence, the court held that the articles clearly required the deed to be legally effective before the directors had the power to register the share transfer and that the purpose of such a clause would be ultimately undermined if a transferee could deliver an invalid deed and yet still be registered as a member. Since one of the existing shareholders had not executed the deed, it had not become legally binding, and therefore the directors acted ultra vires in registering Uconinvest as a member in breach of the Company’s constitution.

However, with respect to the effect of section 40 of the Companies Act 2006, the court ruled in favour of Uconinvest. It held that section 40 did apply on the basis that it protects any person dealing with a company in good faith, even if they are a shareholder. As such, the court refused to order rectification to have Uconinvest’s name removed from the register. Although registering a transfer is usually a unilateral act taken by a company, the court found that the registration formed part of a wider overall transaction, and Uconinvest was “dealing with” the Company when negotiating and agreeing to the sale of the treasury shares. Registration was just simply the final step in this case.

Practical takeaways for companies and investors

This decision offers several practical takeaways for both companies and potential investors alike. For example, both parties should make sure they:

• always review all constitutional documents — not just the articles of association — before proceeding with a share transfer;
• check for any conditions to or restrictions on transfers, such as any requirements for deeds of adherence or investor consent;
• consider how transfer mechanisms may operate in practice, even from the drafting and negotiation stage. Seemingly innocuous boilerplate provisions, like requiring all existing shareholders to countersign a deed of adherence, can effectively provide veto rights to existing shareholders over share transfers, as seen in this case (although ultimately unsuccessful due to the ambit of section 40);
• think carefully about the parties to the transaction. Even though Uconinvest succeeded on this occasion, had the share transfer come from an existing shareholder rather than the Company, the protection under section 40 would likely not have applied and the transfer may have been deemed invalid; and
• always seek legal advice before making changes to the statutory registers, as unauthorised rectification can expose the company and its officers to legal risks and potential personal liability.