Bland & Anor v Keegan

Factual and Procedural Background

This appeal concerns the validity of a written resolution appointing voluntary liquidators to a company ("Company A") where the register of members showed one individual ("Appellee") as the sole holder of all issued shares. The Appellant contended that half of those shares had been transferred to the Appellee via a stock transfer form forged by the Appellee, and thus the resolution and liquidators' appointment were void. The Appellee was appointed liquidator and incurred fees prior to the liquidation being stayed pending resolution of the dispute over the validity of their appointment.

Company A was incorporated in 2013 with 100 shares held solely by the Appellant, who was also sole director initially. The Appellant’s son managed the business, and his then spouse (the Appellee) became a director and acquired 50 shares by transfer in 2015. Following a family breakdown, the Appellee purported to transfer the remaining 50 shares from the Appellant to herself in April 2019 by signing a stock transfer form allegedly forged in the Appellant’s name. Electronic filings at Companies House recorded this transfer and the Appellant’s removal as director.

In July 2021, the Appellee signed a written resolution to wind up Company A and appoint the Respondents as liquidators. The Appellant disputed the validity of the stock transfer form and the written resolution, asserting forgery and invalidity. The liquidators applied under the Insolvency Act 1986 for a declaration that their appointment was valid. The Appellant issued a Part 7 claim seeking rectification of the register of members, asserting the transfer was void and her name had been wrongly removed. The Part 7 claim was stayed by a Tomlin Order settling disputes between the Appellant, the Appellant’s son, and the Appellee, but did not address rectification of the register or the liquidators’ appointment. The liquidators sought to restore their application, leading to this appeal.

Legal Issues Presented

1. Whether entries in a company’s register of members are conclusive evidence of membership for the purpose of validating a written resolution appointing liquidators, even if a share transfer recorded on the register was forged.
2. Whether a person whose name has been removed from the register of members on the basis of a forged stock transfer form retains membership status for voting on company resolutions absent rectification of the register.
3. The legal effect of a forged share transfer on the validity of subsequent company resolutions and liquidators’ appointments.
4. The scope and effect of the court’s power to rectify the register of members retrospectively and its impact on the validity of company resolutions passed during any period of incorrect registration.

Arguments of the Parties

Appellant's Arguments

• The register of members is only prima facie evidence of membership under section 127(1) of the Companies Act 2006 and can be rebutted.
• The stock transfer form was forged and void, so the Appellant’s shares were never validly transferred.
• The Company was not entitled to act on the forged transfer to remove the Appellant from the register; she remained a member for voting purposes.
• The written resolution to wind up the company and appoint liquidators was invalid because it was not passed by the true members.
• Allowing the register to be conclusive despite forgery would enable fraudsters to gain control of companies by forging transfers and passing resolutions to the detriment of true owners and interested parties.

Respondents' Arguments

• The register of members maintained under the Companies Act is conclusive evidence of membership absent rectification.
• Section 112 defines membership by reference to the register, and the court should uphold the validity of resolutions passed by those shown on the register.
• Relying on anything other than the register would be unworkable for companies, directors, and third parties who must rely on the register for meetings and resolutions.
• The Appellant's forgery allegation was not judicially established; no fraud finding was made.
• The Appellant’s remedy was to seek rectification of the register, which had not been granted, so the register's entries must be accepted as conclusive.

Table of Precedents Cited

Court's Reasoning and Analysis

The court commenced its analysis by accepting the assumption that the company’s register of members accurately reflected the electronic filings at Companies House. The critical legal question was whether the register is conclusive evidence of membership for the purpose of validating a written resolution, even if the underlying share transfer recorded on the register was forged.

Relying on section 112 of the Companies Act 2006 and the Supreme Court’s decision in Enviroco v Farstad, the court reaffirmed the fundamental principle that membership is determined by entry on the register of members, which is presumptively conclusive unless and until rectified by the court. The court acknowledged that section 127 provides the register is prima facie evidence, but no authority was cited to support the proposition that a person wrongfully removed by forgery remains a member for voting purposes absent rectification.

The court distinguished the Ruben case, which held forged share certificates were nullities but did not concern wrongful removal from the register. It emphasized that the proper remedy for wrongful removal is an application to the court for rectification of the register under section 125 of the Companies Act, which can be made with retrospective effect as illustrated by Sussex Brick.

The court further noted that the risk of injustice caused by relying on the register is mitigated by the court’s discretion to grant or withhold retrospective rectification and to make consequential orders for compensation or equitable relief, ensuring that innocent parties are protected.

In the instant case, no order for rectification had been made at the time of the written resolution. The parties had compromised the rectification claim without addressing the register’s status or involving the liquidators. Therefore, the court concluded that the judge below was correct to treat the register as conclusive and to hold that the Appellee was the sole member entitled to pass the resolutions and validly appoint the liquidators.

Holding and Implications

The court DISMISSED the appeal.

The holding confirms that, absent a court order rectifying the register of members, the entries in the register are conclusive evidence of membership for the purposes of validating company resolutions, including those appointing liquidators. This reinforces the stability and certainty of company law by ensuring that third parties and office-holders can rely on the register. The court’s discretion to order retrospective rectification and consequential remedies provides a mechanism to address and mitigate fraud or error without undermining the register’s primacy.

The decision does not create new precedent beyond reaffirming established principles but clarifies their application in the context of alleged forgery affecting share transfers and liquidators’ appointments. The direct effect is that the liquidators’ appointment stands valid, and the written resolution is effective despite the Appellant’s forgery allegations, pending any successful rectification application.