Division 9 of Part VI of the Companies Act 1997 makes the share register the definitive record of ownership.
Section 67 — the contents
(a) whether, under the constitution or the terms of issue, there are any restrictions or limitations on their transfer; and
(b) where any document containing those restrictions may be inspected.
(a) the names, alphabetically arranged, and the latest known address of each person who is, or has within the last ten years been, a shareholder; and
(b) the number of shares of that class held by each shareholder within the last ten years; and
(c) the date of any (i) issue of shares to, (ii) repurchase or redemption from, or (iii) transfer by or to, each shareholder within the last ten years — and, for a transfer, the name of the person to or from whom the shares were transferred.
The register is not merely a list of current holders. It must carry ten years of ownership history, including former shareholders and the counterparty to every transfer. That is what allows a liquidator to trace former shareholders under sections 80 and 318, and a court to reconstruct a disputed chain of title.
Failure to comply with subsection (1) or (2) is an offence by the company (penalty under section 413(2)) and every director (section 414(2)).
Under section 67(3), an agent may maintain the share register — and section 65(2)(b) allows a transfer form to be given to that agent.
Section 68 — one register, kept here
(1) Subject to subsection (2), a company shall have only one share register.
(2) The register of a company whose shares are subject to a listing agreement with a stock exchange may, if expressly permitted by its constitution, be divided into two or more registers kept in different places.
(3) The principal register shall be kept in the country.
Where the register is divided, section 68(4) requires notice of each place to the Registrar within one month of division or change, a copy of every register kept with the principal register, and a corresponding entry made within one month in that copy whenever an entry is made elsewhere. Section 68(5) defines the principal register as the one so described in the last notice sent to the Registrar. Non-compliance is an offence by the company and every director.
Section 69 — the register as evidence
(1) Subject to section 71, the entry of a person’s name in the share register as holder is prima facie evidence that legal title to the share vests in that person.
(2) A company may treat the registered holder as the only person entitled to (a) exercise the right to vote; (b) receive notices; (c) receive a distribution; and (d) exercise the other rights and powers attaching to the share.
Subsection (1) creates a rebuttable presumption, expressly subject to section 71 rectification. Subsection (2) is the company’s protection: it may deal with the registered holder alone and need not investigate who is behind them.
Read with section 78 — a shareholder is the person entered in the share register — the register is the operative fact for almost everything the Act does: who votes, who receives dividends, who may requisition a meeting, who may bring a derivative action.
Section 70 — the directors’ personal duty
It is the duty of each director to take reasonable steps to ensure that the share register is properly kept and that share transfers are promptly entered on it in accordance with section 65. A director who fails to comply commits an offence, penalty under section 413(2).
The duty is on each director individually, not on the board collectively, and it cannot be delegated away — although under section 67(3) an agent may maintain the register, the director must still take reasonable steps to see that the agent does it properly.
Section 71 — rectifying the register
Where a name or other particulars are wrongly entered in, or omitted from, the share register, the person aggrieved, or a shareholder, may apply to the Court for (a) rectification; (b) compensation for loss sustained; or (c) both.
The Court may order rectification, or payment of compensation by the company or a director for any loss sustained, or both.
The Court may decide (a) a question of entitlement of a party to have particulars entered or omitted, and (b) any question necessary or expedient for rectification.
A clerical or minor error may be corrected without the Court where either the Registrar, or every shareholder at the time of correction, has agreed in writing.
Section 71(2)(b) allows compensation against a director, not only the company. Combined with the section 70 duty, that is a real exposure for a director who lets the register drift — particularly where a transferee loses a dividend or a vote because a transfer was not entered.
Section 215A separately allows the Registrar to alter the register kept by the Registrar, and section 395A deals with rectification or correction of the Papua New Guinea register.
Section 72 — no trusts on the register
No notice of a trust, whether express, implied, or constructive, may be entered on a share register.
The register shows the registered holder and nothing behind them. Two express exceptions follow: under section 73 a personal representative may be registered as holder as personal representative, and under section 74 the trustee of a bankrupt may be registered as such — and section 73(3) confirms that such registration does not constitute notice of a trust.
A person holding shares for someone else is, for the Act’s purposes, the shareholder: they vote, they receive the dividend, and they carry the section 79 liabilities, with sections 84 and 85 addressing representative and trustee positions. A beneficial owner must protect themselves by the trust deed or nominee agreement — nothing on the register will do it, and there is no caveat mechanism over shares.
Where shares are given as security, the practical answer is a registered security interest under the Personal Property Security Act 2011, since a share is personal property under section 36.
Sources
- Companies Act 1997 — ss 36, 49, 65–74, 78–80, 84, 85, 215A, 318, 395A, 413, 414
- Personal Property Security Act 2011
Before relying on anything here, read the current text of the Companies Act 1997 and check for later amendments. If a decision matters to you, get advice — start with the Office of the Public Solicitor, or find a firm in the law firms directory.