‘Stolen’ shares — why shareholders MUST correct company record inaccuracies

We regularly receive requests for assistance from shareholders who believe that their shares have been unlawfully removed or ‘taken’ from them.

Here, shareholder rights specialist Paul Lunt explains what types of allegations can arise and how the courts treat such cases. 

Stolen share allegations

These allegations can take many forms, including where there’s:

• An agreement that someone should receive shares but there has been a failure to deliver those shares.
• An alteration to Companies House or company records so that they no longer record the shareholding.
• Allegations of fraudulent documentation that purport to show an agreement to transfer shares.

The common thread here is that — for whatever reason — the relevant records don’t record the true position.

Don’t ignore company record inaccuracies

In cases such as this, it may be tempting to simply ignore the (inaccurate) records and act only on the position as it should be (rather than as it’s recorded in the records). 

However, this scenario was considered in the 2024 case of JDK Construction Ltd, where the court warned against ignoring incorrect or inaccurate company records. The decision made clear that the company’s register of members will be presumed to be correct unless and until action is taken to remedy any inaccuracies. 

This means that votes and steps taken based on an incorrectly recorded shareholding position may well still be treated as valid.

Talk to us

It’s essential to take positive steps to remedy inaccuracies in the company records to guard against these risks. 

Our shareholder rights specialists can outline your legal position as a shareholder in a private limited company and help you to navigate this complex area of law.

Talk to us by completing our contact form below.