Where a transfer of shares has taken place by mistake or where, unbeknown to directors, a transfer that breaches the company’s articles and/or existing legislation takes effect, it may be necessary to rectify the information incorrectly entered into the company’s register of members. There is a clear statutory procedure for doing this under the Companies Act 2006 that involves an application to court, but on what grounds will the court order a rectification? And is there a means of rectifying the register without going to court?
Under section 125 of the Companies Act 2006, the affected person, the company or any member of the company may apply to the court for rectification of the register of members if: the name of any person is, without sufficient cause, entered in or omitted from a company’s register of members; or default is made or unnecessary delay takes place in entering on the register the fact of any person having ceased to be a member.
The court has the power to determine the merits of such an application and will ultimately decide on whether a rectification should be ordered and, if so, whether damages should be paid by the company to the aggrieved party…
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