New laws to allow companies to contact shareholders by e-mail

The proposals contained in a final draft Order will make changes to the Companies Act 1985, removing legal obstacles to communicating electronically. Companies will no longer have to rely solely on company information being sent by post.

It is the first order of its kind to be brought forward under the Electronic Communications Act.

Ms Hewitt said:

"This is the first step in implementing the Government's programme to update legislation for the electronic age. This new legislation will enable businesses to provide a better, faster service to shareholders as well as reducing paperwork and costs."

Under the amendments to the Companies Act, companies will be able to:

• register electronically at Companies House;
• allow shareholders to access annual reports, accounts and other information on a web site, or through other electronic communications; and
• allow shareholders to use e-communications to appoint proxies, and give them voting instructions.

They will also be able to choose what type of electronic communications medium best serves their purposes, such as publication of information on a web site, or sending information by e-mail, fax or other methods.

The final draft Order is also flexible to accommodate changes to technology and non-prescriptive which means that neither companies nor their shareholders will be obliged to use electronic communications.

Parliament will debate the principles and consider the legislation before it becomes law.