Startup Corner: www.ecordonline.com launched as private companies fail to maintain statutory registers
Companies are often failing to maintain a company statutory register with potentially criminal consequences, says the founder of startup www.ecordonline.com, which allows private companies to store their essential records online.
Diana Redding (pictured), also the founder and head of legal consultancy Reddings Corporate Law, started to realise around six years ago that there was a decline in statutory registers, in which companies are legally required to provide up to date information of their members, directors, secretaries and charges.
Despite the fact that the government has in the last few years tightened up legislation governing statutory records, Redding says there has been a deterioration in record keeping thanks to low cost online incorporation services and a general lack of awareness of the potential consequences of not keeping a register.
Redding says: “If a company fails to keep registers properly, multiple criminal offences are being committed.
“A person may think that they own a company, or a share in a company, but they don’t if they are not recorded in the statutory register.”
According to Redding, a dividend can only legally be paid to a member of a company registered in its company register. “There is a massive untapped source of income for HMRC, if HMRC were to check whether the vast numbers of dividend payments made over the last 10 years were properly declared to members recorded in statutory registers,” she adds.
Formerly statutory records were manually entered in leather bound books; a practice that has become outdated. However Redding says she could find little in the way of an affordable alternative, leading to the creation of www.ecordonline.com.
The new portal can also be used as a deal room to share files securely during the due diligence process at a minimal cost, with the data hosted and backed up in the UK by Red Rooster.
Redding says: “It has taken nearly three years, thousands of hours and considerable financial investment to bring www.ecordonline.com to the point of launch.
“It will only take one high profile case – where, for example, accountants are found liable for advising clients to pay themselves dividends, when Statutory Registers have not been properly kept – and good practice will resume. I see no prospect of company law being changed to remove the need to keep Statutory Registers.”