The Lost Minute Book and the Incomplete Register
A newly appointed company secretary at a 12-year-old private company finds the statutory records in disarray. The minute book has no minutes for the last three years, though board meetings clearly occurred. The register of members lists 14 holders, but a 2019 share transfer to an employee trust is undocumented. Two share certificates were issued without board approval recorded. The company has 38 shareholders on its own spreadsheet, including the trust. A prospective investor is conducting due diligence in three weeks and has asked for a complete statutory register. The prior secretary left abruptly and took some files.
1. How should the new secretary prioritise reconstruction of the records before due diligence?
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Prioritise by legal consequence and evidence availability. First, reconstruct the register of members, because it determines who can vote and receive dividends and is the document the investor will test. Start from the spreadsheet, share certificates, bank records of subscription monies, and tax filings, then reconcile each holder to a source document. The 2019 trust transfer must be traced: if no instrument of transfer or board approval exists, the secretary should not simply record it as valid; the board must consider ratification or correction, with legal advice.
Second, reconstruct board minutes from diaries, emails, and resolutions circulated in writing, and mark them as reconstructed rather than fabricating contemporaneous records. Third, document the missing certificates and the approval gap. The secretary should report the gaps to the board in writing, propose a remediation timetable, and tell the investor's advisers what is being corrected rather than presenting an incomplete register as complete.
2. What should the secretary disclose to the board about the prior secretary's removal of files, and how should the company respond?
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The secretary should give the board a written, factual report: which categories of records are missing, what evidence suggests they were removed, and what steps have been taken to recover them. The report should avoid accusations beyond the evidence but should not minimise the risk. The board should authorise a formal request to the former secretary for return of company property, preserve any relevant emails or devices, and take legal advice on remedies, including injunctive relief if records are being withheld.
The company should also notify its auditor and, if the missing records affect filings, consider whether any regulatory notification is required. For the investor, the board should decide a single disclosure position: describe the remediation, the reconstructed register, and any unresolved items. Concealment is the greater risk; a documented, board-approved correction process is far more defensible than a clean-looking register with no audit trail.