Shareholder Communications
10th Aug 2009
The Companies Act 2006 has introduced a new, more flexible regime which allows companies to communicate with their shareholders more quickly, more economically and in a more environmentally friendly way – electronically!
This new development is likely to benefit many companies, large and small.
In order to communicate with its shareholders, a company must first contact each shareholder asking them if they agree to receive electronic communications by email and via the company’s website.
Where the shareholder agrees to electronic communications by email, the shareholder must provide the company with a personal email address for this purpose.
If a shareholder also agrees to website communications, the company can opt to notify the shareholder by email as and when documents are posted on the website.
Even where the shareholder does not respond it is still possible for the company to use the website method where a hard copy letter is posted to the shareholder advising that documents have been posted on the company’s website.
There is no requirement that all shareholders must be notified by any one means.
The company will need to prepare and regularly update a list of each shareholder’s communication preference.
It is worth noting that a shareholder can at any time request hard copies of specific documents or that all communications revert to being sent in hard copy.
A company can also accept communications from its shareholders electronically.
If a company wishes its shareholders to communicate in this way it must provide an email address on its corporate documentation and website.
A company may also choose to accept documentation in an electronic form that would previously have been required to be in hard copy signed by the shareholder, for example, written resolutions.
The company must consider what additional measures it would require to confirm the identity of the shareholder. This will be largely a matter of common sense and dependent on the number of shareholders involved.
Small family companies are unlikely to have formal checks of this nature, whereas large companies may require usernames and passwords or provide unique personal identification numbers (PINs).
* Zoe Dick is a solicitor specialising in business and company law with BHP Law. She can be contacted on (01325) 376430.
Author: Zoe Dick, Solicitor (ZoeD@bhplaw.co.uk)
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