UK companies can use the web to communicate with shareholders

The rules also widen the scope of information that can be delivered electronically to Companies House. Companies will no longer have to rely solely on company information being sent by post.

The rules are contained in the Companies Act (Electronic Communications) Order 2000 which came into force on 22nd December 2000. Under its amendments to the Companies Act, most companies can now:

• Seek the agreement of shareholders to the distribution of 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.

Companies will 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.

Neither companies nor their shareholders will be obliged to use electronic communications; those companies wishing to use electronic communications will have to agree with individual shareholders.

In addition to the information that can already be sent to the Registrar electronically, it will be possible later in 2001 to incorporate companies electronically.

The timing of this will depend on having the necessary systems in place and the Registrar of Companies issuing the appropriate directions. Phil Coates of Companies House told OUT-LAW.COM that the target date for enabling the electronic incorporation of companies is 31st March 2001 for companies in England and Wales and possibly a later date for Scottish companies.

The full text of the Order

Best practice guidance on "Electronic Communications with Shareholders" is available from the Institute of Company Secretaries and Administrators (ICSA) at 16 Park Crescent, London, W1B 1AH and a summary of key recommendations can be accessed on the ICSA web site at www.icsa.org.uk (click “What’s New” on the ICSA site).