Reconciling your share register before diligence

When an investor’s counsel asks for your statutory registers, they are performing a reconciliation. They take three sources and check that they tell the same story:

1. The board and shareholder resolutions authorising each allotment
2. The Register of Members, who the company says owns what
3. The share certificates actually issued, and the filings that recorded them

If any two disagree, the question becomes “who actually owns this company”, and that is not a question an investor funds around. It gets traced before terms progress.

1. Resolution exists, certificate never issued. The round closed, money arrived, and nobody printed and signed the certificate. Common in companies that raised from friends and family early.
2. Allotment made, return not filed. An allotment of shares normally requires a return of allotment filed with the Registrar within the prescribed period. A missed filing carries penalties and leaves the public record disagreeing with your register.
3. Transfer recorded informally. An early shareholder left and their shares “went back to the founders” by agreement, with no executed transfer instrument and no board approval. Legally the register may still show the departed holder.
4. Register never maintained at all. The cap table lives in a spreadsheet and the statutory register was never written up. The spreadsheet is not the register.

Before diligence, fixing a gap is administrative: locate the resolution, issue the certificate, make the filing, pay any late fee, update the register. Unpleasant but bounded.

During diligence it becomes a closing condition. The investor will not complete until the chain of title is clean, so your round now waits on the Registrar’s processing times and on your company secretary’s availability. Neither of which you control, while your runway continues.

Worse, it changes what the investor thinks about everything else. A company that cannot say who owns it invites a closer reading of every other document.

1. List every issuance since incorporation. Founders’ subscription shares, every round, every ESOP exercise, every conversion.
2. For each, find three things: the authorising resolution, the certificate (number and date), and the filing that recorded it. A row missing any one of the three is a gap.
3. List every transfer. For each, find the executed transfer instrument and the board approval recording it.
4. Total the register and compare it to your cap table. They must agree on issued shares. If they do not, one of them is wrong and it is usually the spreadsheet.
5. Give the list to your company secretary with the gaps marked. This is routine work for them; what takes time is discovering it under pressure.

• The Register of Members, current
• Copies of all issued share certificates
• Every allotment resolution, with the corresponding filing
• Executed transfer instruments for every transfer
• A one-page reconciliation you prepared yourself, tying the register to the cap table

That last item is worth more than it looks. Handing counsel a reconciliation you have already done says you understand what they are about to check, and it is the cheapest credibility available in diligence.

Where this sits in the wider document set: the data room checklist. For how the cap table itself should be presented: sharing a cap table.

Tell the investor before they find it. A disclosed gap with a remediation plan and a date is a manageable item. The same gap discovered by their counsel is a question about what else you have not mentioned, and it is answered by a longer diligence list.

A practical summary, not legal advice. Company-law requirements, filing deadlines and remediation depend on your facts and on the current rules; take advice from your company secretary or counsel on your own situation.