John Palmer & Anor v P1 Pit Stop Limited & Ors

The statutory power to rectify a company's register under the Companies Act 2006 may be used to create a register from scratch where no register has ever existed. The court may determine the legal title questions necessary for rectification. Although Part 8 is not designed for a trial of disputed facts, active case management may transfer proceedings to Part 7 where necessary to resolve the real dispute between joined parties and fulfil the overriding objective. An effective allotment requires agreement to become a member and an unconditional right to registration; filings alone do not create membership. Legal title does not pass without a proper transfer instrument. Wrongdoing does not itself authorise share expropriation. Retrospective rectification may be ordered where appropriate.

The claimants sought rectification under section 125 of the Companies Act 2006. The company had never kept a register of members. John Palmer claimed 250 shares and asserted that Magna Secretaries Limited held a further 500 shares on trust for him. The defendants disputed that position and relied on later Companies House filings recording transfers to members of the Forland family.

The proceedings began under Part 8, were transferred to Part 7 by consent, and proceeded to a two-day trial. The central issues were whether the court could create a register where none existed, whether it could resolve the disputed title issues within these proceedings, whether the 500 shares had ever been allotted to Magna, and what legal effect should be given to the recorded transfers.

1. Disposition. The court ordered rectification of the register to show John Palmer with 250 ordinary shares, Howard Forland with 200, and Elaina Forland with 50. Magna Secretaries Limited was excluded. The entries were given retrospective dates, notice was directed to Companies House, and consequential matters, including costs, were reserved.
2. Jurisdiction and procedure. Section 125 of the Companies Act 2006 permits the court to create a register from scratch where the company has never had one. The judge applied by analogy Re Data Express Ltd (The Times 27 April 1987), where a destroyed register had been replaced.
3. Part 8 is not ordinarily suitable for a trial of disputed facts. However, the flexible approach in Re Hoicrest Ltd, Keene v Martin ([2000] 1 WLR 414) remained binding. The restrictive procedural view in Nilon Limited v Royal Westminster Investments S.A. ([2015] BCC 521) was not followed. Chen v Ng ([2017] UKPC 27) confirmed that, where the relevant parties are joined, the court may resolve the issues on which registration depends. The transfer to Part 7 was therefore proper.
4. Membership and allotment. A person becomes a member by subscribing to the memorandum or agreeing to become a member and acquiring the right to registration. An allotment requires a contract and takes effect when the incoming member has an unconditional right to entry under section 558 of the Companies Act 2006. Magna had not agreed to subscribe, paid no subscription price, and had no such right. The 500 shares recorded in the annual returns had therefore never been allotted.
5. Transfers and wrongdoing. Without a proper instrument of transfer, legal title to the ten shares allegedly transferred from Mr Palmer did not pass. Mr Palmer therefore retained legal title to his original 250 shares. The articles, the Companies Act 2006 and the general law provided no basis for expropriating shares because of alleged shareholder wrongdoing, and the wider Gainsborough dispute was not determined.
6. Additional guidance. The judge held, as an issue not central to the claim, that members cannot circulate a written resolution themselves. Part 13 and sections 292, 293 and 293(7) of the Companies Act 2006 require circulation by the company; section 293(7) does not cure a complete failure to comply with section 292. The conclusions in Re Sprout Land Holdings ([2019] EWHC 806 (Ch)) and Kamenetsky v Zolotarev ([2023] EWHC 2619 (Ch)) were applied.

The claim was commenced by Part 8 Claim Form on 6 August 2021. A consent order dated 24 March 2023 transferred it to Part 7 and directed a two-day trial. This was a first-instance determination; no earlier appellate decision is stated.