A startup needs to set up and maintain three registers that record the company’s:
  • members (i.e. shareholders);
  • option holders (only if the company has granted options); and
  • ‘debenture’ holders (only if the company has issued debt, such as a convertible note).
When your company is incorporated, ASIC will provide you with a copy of these registers. These are usually in the form of an excel spreadsheet or some other table which can be electronically updated. You can also set up and maintain a hard copy register, for that vintage feel. Below, we answer some FAQs about the records a startup should keep and what information they must include.

Are Registers Really That Important?

Yes. The person listed on the register of members is the person who holds legal title to those shares (i.e. owns the shares).
It’s a common misconception that notifying ASIC of any change to the company’s shareholders (for example, following an issue of new shares or a transfer of shares from one person to another) through the online form is sufficient ‘proof’ as to who legally owns the shares. ASIC notification is simply a procedural requirement (which you must do to avoid incurring fines!) but updating and maintaining the registers is the actual proof of title.
It’s important then to only grant access to registers to certain individuals in the company (usually the director(s) or company secretary) to prevent unauthorised access and amend the register. Registering access may be as simple as password protecting the register (if it is a spreadsheet) or locking it away (if it is a physical register).

OK, So When is a Register Updated?

You need to update the register every time the company issues or transfers shares (the register of members), options (the register of option holders) or debentures (such as convertible notes, in the register of debenture holders).

What Does a Register Need to Contain?

The register of members must contain information, such as:

  • member’s name and address;
  • date on which the member’s name was entered into the register;
  • date on which every share transfer or issue takes place;
  • number of shares involved in the transfer or issue;
  • shares each member holds;
  • class of shares;
  • the share numbers (if any), or share certificate numbers (if any), of the shares;
  • amount paid on the shares;
  • whether or not the shares are fully paid;
  • the amount unpaid on the shares (if any);
  • whether the shares are held beneficially or not;
  • the date the member stopped being a member.

The register should also show who stopped being a member in the last seven years. You can keep this information separate so that the register only has the company’s current members.

Importantly, you must notify ASIC of any changes to your register. You can do this online using a form 484.

Register of Option Holders and Copies of Options Documents

If your company has issued options, the company needs to update its register of option holders. A company must update the register within 14 days of granting new options with the following information:

  • option holder’s name and address;
  • date on which the company entered the option holder’s name in the register;
  • date the company granted the options;
  • number and description of the shares or interests over which the company granted the options;
  • the exercise period for the options;
  • any event that must happen before the option-holder can exercise their options;
  • any payment for the grant of the options;
  • any payment for the exercise of the options or the method for determining the payment.

If the option holder exercises the options, the company must update the register of option holders and also the register of members. This is because the option holder has become a shareholder. If the company has more than 20 members, ASIC only needs to be informed if there are changes to any of the top 20 members.

The company must also keep a copy of every document that grants an option over unissued shares or interests. This would require you to keep a copy of the details of any option plan that the company has as well as the individual agreements granting the options.

Register of Debenture Holders

This must contain the following information about each holder of a debenture:

  • the debenture holder’s name and address; and
  • the amount of the debentures held.

A debenture is legal jargon for debt and includes instruments such as a convertible note.

Where Should I Keep the Registers?

Technically, you should keep the registers at the company’s registered office or its principal place of business. But in today’s world of cloud storage and remote server access, an electronic register should be kept securely and should be accessible from the company’s registered office (your address listed in your incorporation documents).

Make sure you can print hard copies of the register.

Is My Cap Table Sufficient?

No.

Although you can (and should) keep your cap table updated to record the details of your company’s members, option holders and convertible note holders, this does not replace the need to have those registers set up and maintained. A cap table and register may have similar information, but are two very different things!

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If you have any questions about your record keeping, get in touch with our specialist startup lawyers on 1300 544 755.

Daniel Ah-Sun
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