Out-Law Guide | 30 Mar 2005 | 2:57 pm | 3 min. read
Changes made by the Companies Act 2006 provisions for electronic communications (adopted January 2007) have not been incorporated into this article.
In December 2000, rules were introduced under the Electronic Communications Act 2000 which enable companies to use the internet in their communications with Companies House, their shareholders and auditors.
The Companies Act 1985 (Electronic Communications) Order 2000 amends the Companies Act 1985 to allow companies to send and receive certain documents electronically, as an alternative to communicating by post.
Although the Order came into force on 22 December 2000, the new procedures for electronic filing only first became available in May 2001.
The Order provides that annual accounts, directors' reports, auditors' reports, summary financial statements and notices of meetings can be provided electronically, either by email or by fax, to those entitled to receive them. Individuals must have agreed to receiving such documents electronically, and have provided an address for that purpose. There are also provisions for the appointment of proxies by electronic communication.
Where a shareholder has agreed to receive documents electronically, the company may email the documents themselves or send details of a website address on which the documents can be viewed. Attaching documents to an email may lead to practical problems such as the incompatibility of a shareholder's software. Whilst sending the website address by email avoids these problems, the company's website may be unable to cope with the number of hits it might receive once the notice has been sent out.
The Order has made amendments to Table A, the name given to the standard form of articles of association for companies. The changes allow companies to deliver documents electronically, and notices are deemed to have been served 48 hours after they are sent. Where a company's articles do not provide for notices to be served electronically, the amended provisions of Table A are deemed to apply, regardless of whether the rest of Table A applies to that company (since most companies replace at least parts of Table A with their own tailored set of articles of association).
Companies should keep in mind possible data protection issues. A shareholder's email address will not form part of the address required to be shown in the register of members, and therefore the standard exemption under the Data Protection Act 1998 will not apply (for more information, see our guide on Data Protection).
From May 2001, Companies House has accepted electronic filings for certain details. Initially, only changes in a company's registered office address and details of the appointment and termination of directors and secretaries (or changes to their details) can be filed, but the range is due to increase in the near future. For those wishing to file other documents electronically, they may continue to do so using Companies House's dial-up facility.
Companies House is keen to move towards replacing this system. It has experienced only modest take-up due to users' concerns about security and the need for users to invest in compatible software.
For security reasons, the new procedures do not go so far as to allow documents to be filed by email. Instead, documents are sent to a secure extranet operated by Companies House, using software specifically approved by Companies House. The new procedure is most likely to be of interest to those who file documents on a regular basis, such as company secretaries of a large group of companies.
Those wishing to take advantage of the new system will need to register as 'presenters' by writing to Companies House or completing a form, giving the names and the numbers of each company for which they wish to file documents electronically, stating that they have the authority to deliver information electronically on the companies' behalf, and including a six-digit authentication code. It will be possible for groups of companies to share the same code and, in any transmission, a presenter may file up to 50 documents.
Once Companies House receives an electronic message (generated by the approved software) despatched by the presenter containing the authentication code, it is treated as the electronic equivalent of an officer's signature on a hard copy statutory form.
The Companies Act 1985 has been amended in respect of documents which require statutory declarations to permit an electronic statement of compliance instead. In the future, therefore, it will be possible to incorporate a company online.
The changes are part of an ambitious plan for Companies House to move to the electronic storage and communication of most procedural documents. Companies House has for some time been operating an online search facility on a subscription only basis and offers a number of paid non-subscriber information services.