Andrew Bland & Anor v Jeanette Keegan (Re JDK Construction Limited)

For the validity of members’ resolutions, membership is generally determined by the register of members unless and until it is rectified. The register is only prima facie evidence, rather than conclusive evidence, because Companies Act 2006 creates express exceptions. A subscriber becomes a member on incorporation, and a non-subscriber requires both assent and registration.

However, a wrongful removal from the register, including one resulting from forgery, does not cause the historic entry to be disregarded for voting purposes. The court may rectify the register and make consequential or retrospective orders. That discretion permits the court to prevent injustice to members and third parties who have relied on resolutions passed while the register was inaccurate.

Jeanette Keegan had originally held all the shares in JDK Construction Ltd. Julie Keegan purported to acquire Jeanette’s remaining 50 shares by signing a stock transfer form in Jeanette’s name. The register was assumed to have been altered accordingly. Julie then signed written resolutions as sole member, placing the company into voluntary liquidation and appointing Andrew Bland and Janet Francis Mayo as liquidators.

HHJ Hodge KC held that the resolutions were valid because Julie appeared as sole member on the register: [2023] EWHC 2805 (Ch). Jeanette appealed, contending that the transfer was forged or unauthorised and that she remained a member whose voting rights invalidated the resolutions. The central issue was whether an unrectified register determines membership for the validity of members’ resolutions.

1. Appeal dismissed unanimously. Lord Justice Snowden gave the judgment, with which Lady Justice Asplin and Lady Justice King agreed. The judge below was correct to hold that the written resolutions and the liquidators’ appointment were valid.
2. Companies Act 2006 section 112 distinguishes subscribers from other members. A subscriber becomes a member upon incorporation even if not entered on the register. A non-subscriber requires both assent and entry on the register. The register is therefore not universally conclusive, although it ordinarily identifies the company’s members.
3. The principle explained in Enviroco v Farstad, [2011] UKSC 16, applies when testing the validity of members’ resolutions. A person shown on the register is presumptively the member, to the exclusion of another person, unless and until rectification. A forged stock transfer is a nullity, but Ruben, [1906] AC 439, did not determine the different question of the voting status of a person wrongly removed from the register.
4. The proper response to a wrongful entry is an application for rectification under Companies Act 2006 section 125 or an ordinary CPR Part 7 claim. The court may make consequential orders and may rectify retrospectively, but retrospectivity is discretionary. It must be exercised so as to avoid injustice, including prejudice to persons who have acted in reliance on resolutions passed while the register was inaccurate.
5. No order retrospectively rectifying the register was made. The compromise of the rectification claim did not address the register or involve the liquidators. Julie was therefore the only registered member when she signed the written resolutions. The voluntary winding-up resolution and the resolutions appointing the liquidators were valid and effective.

• Court of Appeal (Civil Division). Dismissed Jeanette Keegan’s appeal and upheld the validity of the written resolutions and the liquidators’ appointment: [2024] EWCA Civ 934 .
• High Court of Justice, Business and Property Courts in Manchester. HHJ Hodge KC declared that the liquidators had been validly appointed, holding that the register determined the company’s membership at the time of the resolutions: [2023] EWHC 2805 (Ch) .