Here we look at one small area which may help to companies and actually save them some money rather than merely adding to the burden of compliance: two-way electronic communication with shareholders.

Under the old Companies Act 1985, although companies could send some documents to members electronically - accounts and meeting notices, for example - it was optional. The intention under the Companies Act 2006 is to make electronic communication with members the default position.

Since the provisions came into force on 20 January this year companies have been encouraging their shareholders to agree to this which will save them paper, printing and distribution costs. This will bring shareholder communications into line with filing of tax returns and most documents at Companies House where e-filing is now commonplace.

Communication to members

A company can continue to use any existing authority for e-communication. Otherwise, it will be necessary to procure the passing of a shareholder resolution or amend the articles. A report as of 8 October this year on the trend among listed companies indicates that there is a preference towards the latter route. Listed companies (excluding AIM) must adopt the new regime by means of a general meeting. Other companies have the option of writing to their members on an individual basis.

Successful implementation will enable a company to notify its members via e-mail and/or its website. Members who do not reply objecting to the changes within 28 days of notification can be deemed to have consented. Inevitably there is scope for an awkward shareholder to agree for information via the website but not via e-mail in which case the company must continue to notify by hard copy the postings on its website.

Communication from members

If it provides an electronic address a company can receive e-communications from its members. in response to notices of meetings or invitations to appoint proxies. It will also need to consider what security measures are prudent to verify the identity of its members.

Conclusion

In addition to the above, listed (not AIM) companies must also comply with Chapter 6 of the Financial Service Authority's Disclosure Rules and Transparency Rules sourcebook full details of which are downloadable at http://www.fsa.gov.uk/pubs/hb-releases/rel64/rel64dtr.pdf

One of the more commercially attractive aspects of the new communications regime must surely be that a company can now seriously encourage its members to look at its website and vaunt the benefits of its business.

Printer friendly version

Email this article to a friend

Bookmark this

---