Recent legislation simplifies the process for companies which wish to communicate electronically with their shareholders, for example, giving notices of shareholder meetings by e-mail, or posting documents on a website instead of sending them out by post. This can be particularly advantageous for companies which wish to communicate quickly, have numerous shareholders, or shareholders which are geographically disparate.
Electronic communications result in cost savings for companies through their reduced paper consumption. The policy intention was to remove requirements for the use of paper communications so that companies can, for example, make their full annual report and accounts accessible to shareholders via electronic means (unless individual shareholders request a paper copy).
Obtaining the requisite consent and electronic address information from shareholders can take time, so companies which wish to take advantage of the ability to send electronic communications are advised to make appropriate arrangements in advance and should bear the following in mind:
Sending electronic forms of documents and information
Shareholders must have agreed to receive documents electronically and must have supplied an electronic address (eg e-mail address or fax number) for this purpose.
Use of website to give notice of meetings
When a company notifies its shareholders of the publication of a notice for a meeting on its website, the notice must state that it concerns a notice of a company meeting and specify the place, date and time of the meeting. Public companies must also state whether or not the meeting will be an annual general meeting, or convened for a particular purpose. The notice must be available on the website from the date of the notification until the conclusion of the meeting.
Agreement to use of website for communication
Documents or information may only be distributed by a company to its shareholders by publication on a website if the shareholder in question has agreed that the information may be sent to him in that manner, or is deemed to have so agreed, and has not revoked that agreement.
Deemed agreement to use of website
A shareholder may, subject to satisfaction of certain technical conditions, be deemed to have agreed to receive electronic communications from a company if:
- the shareholders have passed a resolution to that effect; or
- the company's articles of association contain a resolution to that effect
and, in either case
- the company must have separately asked the shareholder to agree that the company may send documents or information generally, or the specific documents or information in question, to him/her/it by publication on a website and either the shareholder has consented or the company has not received a response to its request within 28 days of making it.
Companies interested in making use of electronic communication options should seek advice on implementing the necessary arrangements.