Company Law Forum - Explaining Companies Act 2006 - Companies Act 2006

Companies Act 2006 - E-Communications

Tuesday, 13 November 2007

E-Communications - What does the Act say?

Companies may now send documentation and information to shareholders electronically. The default method of communication is via the company’s website with a positive opt-in for hard copies subject to certain shareholder consents.

Section 308 and 309 cover the publications of meeting notices in electronic form or via a website.

Sections 1143 to 1148 covers provisions relating to communication with shareholders.

Schedule 5 covers communications by a company.

Schedule 5, part 4 sets out the relevant conditions

CHOICES AND ACTIONS

Change articles or pass a resolution?

When to obtain shareholder consent?

Which documents and information should be included?

How easy should it be to elect for a hard copy?

How many copies of documents should you print in future years? Remember shareholders can always opt in at any time.

What will you send to shareholders in future years?

Can you use E-Communications to communicate other things to shareholders who sign up for electronic notifications?

How to capture the wishes of new shareholders and set up a system for recording deemed agreements

ICSA Guidance on Electronic Communications with Shareholders

E-COMMUNICATIONS - WHAT HAVE WE DONE AT PRUDENTIAL?

Held our AGM in May, when we changed our articles to enable us to use website communications as the default method of communicating with our shareholders.

Chose to use AGM mailing also to ask shareholders to consent to receiving notification of documents being available on website. Explanation included in Chairman’s AGM letter with the card requesting hard copies attached to the proxy card.

Out of 70,000 shareholders, 6,200 requested hard copy communications, by completing and returning the card within the 28 day period, whilst over 5,000 requested that we communicate via email in future.

Interim mailing in August. Much reduced hard copy run with only 400 requesting hard copies after mailing.

Sent shareholders letter of notification, including key financial highlights and dividend timetable.

2008 mailing will be in similar format in a letter to shareholders probably with no Summary Financial Statements.

E-COMMUNICATIONS - USEFUL TIPS

Change your articles and seek shareholder consent at the same time (saves two sets of explanations)

Choose the order on your request card carefully – provide email address, then default consent, then hard copy request (more likely to get favourable take up)

Emphasise shareholder choice rather than just cost savings (they can’t argue against that)

Make your first mailing under new regime a short document like an interim rather than full AGM pack (easier if you need reprints)

Consider including more than bare minimum in future mailings (avoids additional requests for hard copies). In our interim mailing, we sent shareholders an explanatory letter, which contained the key financial figures and the dividend timetable.