Most private companies run their equity off a spreadsheet. The cap table is circulated to the board, attached to term sheets and updated when an employee exercises options or a founder sells a slice to an incoming shareholder. None of that gives it legal force. The Companies Act 2013 recognises a different document, the Register of Members, and when the two diverge the divergence is not a bookkeeping annoyance: it unsettles who is a member, who may vote, and whether resolutions passed on the strength of the spreadsheet survive a challenge. What follows is what the statutory record establishes, how ESOP conversions and secondary transfers fall out of it, and the routes back to a clean record.
The Register of Members Is the Statutory Record, the Cap Table Is Not
Section 88(1) of the Companies Act 2013 requires every company to keep a register of members indicating separately, for each class of equity and preference shares, the holding of each member. For a company limited by shares the prescribed form is MGT-1, and Section 88(2) adds an index of names. The annual return filed with the Registrar is built from it.
A cap table has no equivalent statutory footing. It is an internal management document, and it does a different job: it tracks options, warrants and convertible instruments that have not become shares, whereas the Register records actual shareholdings. The two can therefore differ legitimately. The problem is when they differ about something that has already happened, such as an option exercised or a transfer executed and approved.
What Section 95 Actually Says
Section 95 provides that the registers, their indices and copies of annual returns maintained under Sections 88 and 94:
shall be prima facie evidence of any matter directed or authorised to be inserted therein by or under this Act.
The operative words are "prima facie", not "conclusive". Entries are presumed correct and the burden sits on whoever disputes them, but the Register is not beyond challenge, and the widely circulated shorthand that it is "conclusive" overstates the section. Its practical primacy comes from a different direction: entry in the Register is the mechanism by which membership is constituted. A person named in it is treated as the legal owner of the shares; a person not named in it does not hold legal title, whatever the cap table, the board minutes or the shareholders' agreement record. Dividends and voting rights follow the Register, not the spreadsheet.
The Seven-Day Rule
Rule 5 of the Companies (Management and Administration) Rules 2014 requires entries to be made within seven days after the board or its duly constituted committee approves an allotment or transfer. This is a mandatory duty on the company itself, and it is where most defects originate: the board approves, the cap table is updated that week, and the Register is left for later. Later often means the next funding round, by which time the gap has been carried into an annual return and possibly into resolutions passed in the interim.