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All companies in Australia must maintain a register of their shareholders (or ‘members’), known as a share register or members register. Many companies also maintain a capitalisation table (‘cap table’). Assuming all the information required to be kept on a members register is contained within your cap table and you are able to extract that information in physical form at any time, your cap table software could also act as a members register for your company. However, most cap table software providers do not store all the necessary information.

What Information Should a Members Register Include?

Under the law, a members register must include the:

  • member’s name and address;
  • date on which the member first became a shareholder;
  • date on which every transfer or issuance of shares took place;
  • number of shares in each allotment;
  • total number of shares held by each member;
  • class of shares;
  • share numbers or certificate numbers (if any); and
  • amount paid on the shares.

It must also include:

  • whether or not the shares are fully paid and, if not, the amount unpaid on the shares;
  • where applicable, the date the member ceased to be a member of the company; and
  • the name and details of each person who ceased to be a member within the last seven years. 

If your company has granted options (e.g. options issued to employees under an ESOP) or convertible securities (e.g. convertible notes), you must also keep a register of these security holders.

Why Do I Need to Maintain a Members Register?

It is important to maintain an accurate and readily available members register because anyone has a right to inspect a copy of it. When they do, you must provide access within seven days. If you do not keep your members register on a computer, they may inspect the register itself. If it is on a computer (as is most likely the case), the person inspects the register by computer. Maintaining a members register is a legal obligation. The company and its directors may be subject to penalties for failure to comply with the law. 

Where Must the Members Register Be Kept?

You must keep the company register at:

  • the company’s registered office;
  • the company’s principal place of business;
  • a place in your state or territory where the work involved in maintaining the register is done; or
  • another place in your state or territory approved by ASIC.

Traditionally, companies kept physical copies of their share register in a bound or loose-leaf book. Today, it is very common for companies to maintain their registers digitally. 

The law states that you may keep a members register on a computer as long as it is ‘capable of being reproduced in a written form at any time’. Therefore, if your company maintains an electronic register, you must be able to export the data at any time in a form that:

  • shows all the necessary information; and
  • is in a standard format (e.g. a Microsoft Word or Excel file).

What if I Am Using Cloud-Based Cap Table Management Software?

Cloud-based storage raises an additional problem. Technically, the relevant data is not stored ‘at’ the place of business digitally, but rather on remote storage systems which are available to users via the internet.

Currently, the law does not consider the possibility of cloud-based storage. In fact, the law still states that companies must provide data by means of floppy disks if requested.

However, you will have satisfied the requirements of maintaining a members register as long as you can:

  1. extract all the information required of a members register from your online cap table; and 
  2. provide it to anyone who requests it in an easy to access and read file format.

Key Takeaways

Whilst it is technically possible for a cloud-based cap table management platform to act as your company’s members register, many systems do not satisfy the legal member register requirements. Therefore, you should consider the software carefully. If it does not record all the necessary information, you should maintain a separate member register for your Company. If you have any questions about your startup’s cap table or members’ register, get in touch with LegalVision’s capital raising lawyers on 1300 544 755 or fill out the form on this page.

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