How much reliance can an officeholder place on a members register? Can he or she assume that it is conclusive evidence of the record that details a company’s members?
In this case, the Court of Appeal had to consider these questions when it looked at an earlier decision by a High Court judge who had determined that liquidators had been validly appointed. This determination was made despite the removal of the Appellant’s name from the register of members of the company, due to a fraudulently executed stock transfer form. The High Court had held that the register of members was conclusive as to the identity of the members of the Company at any particular point in time. This meant that a written resolution signed by the transferee, appointing joint liquidators, had been validly passed.
The Court of Appeal needed to ascertain whether the High Court decision had been correct. To do so, it was necessary to look at whether the resolution passed by the company to place itself into voluntary liquidation was indeed valid. This point had to be considered due to the uncertainty as to who the members of the company were at the time the resolution was passed. This led to the court having to consider the status of an individual who has been fraudulently removed from the register of members of a company.
The resolution in question was signed by the person who was shown as the holder of all the issued shares in the company in the register of members at the time. However, one half of those shares had only been registered in that person’s name following her unauthorised execution of a stock transfer form in the name of Jeanette Keegan, the Appellant, who was the person who had previously been shown on the register of members as the holder of those shares.
The trial judge had decided that, even if the stock transfer form were a forgery, the register of members was conclusive as to the identity of the members of the company at any particular point in time. Without more, that would have meant that the written resolution was valid and effective.
However, the Appellant contended that the transfer of her shares, the entry on the register and the resolution for winding up and the appointment of the liquidators were all void and of no effect. This was then resisted by the Respondents who were appointed as liquidators by the resolution, and who had incurred considerable fees and expenses winding up the company before the liquidation was stayed whilst the validity of their appointment was resolved.