Under the Companies Act there are now four options a company can use to send communications and documents to a shareholder:

  • Hand delivery

  • Post

  • Fax

  • Electronically 

Paperless communications  

The last in that list is the most recent and comes with the following rules under the Electronic Transactions Act, as follows:

1. A company can send communications and documents to a shareholder electronically so long as the information is accessible for subsequent use by a shareholder.

2. The shareholder must have given their consent to receiving communications and documents electronically. 

3. A shareholder can elect to receive all communications and documents electronically or only for a particular notice, report or document (e.g. you could have a tick list for a shareholder to choose from).

4. If a shareholder has requested for communications and documents to be received electronically, youmustdo so by this means.

This modern way of communicating does not alter section 209 of the Companies Act, which requires a company to send a copy of its annual report or a notice to all shareholders that the annual report is available and that they may request a copy. If a shareholder has agreed to receive communications electronically, a section 209 notice must be sent electronically. 

Going online 

The law has also evolved to allow shareholders to communicate with their company through electronic means as well (e.g. if permitted by the board a shareholder may send its postal votes to the company or appoint their proxy electronically). 

For example, your company could have a webpage or an app that allows your shareholders to vote online before a shareholders meeting without the need for a shareholder to attend the meeting or to appoint a proxy or representative. Nonetheless, this would not remove the obligation for a company to comply with the law of postal voting under the Companies Act (e.g. votes must close 48 hours before the start of the meeting).  

If you wish to go online for shareholders and allow for electronic communications a number of company documents will require updating, including the notice of meeting to shareholders, proxy forms, postal voting forms and the company's constitution.

If you are interested in finding out how your company can join the age of digital communications, give us a call to discuss. 

Written by James Moran at 09:00




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