NEWS // The Companies Act 2006 - Electronic Communication
The Companies Act 2006 ("the Act") will constitute the biggest change in company law for a generation. The bulk of its provisions are due to come into force in October 2008, however, certain provisions came into force on 20th January 2007. These provisions relate primarily to electronic communication ("e-com") between companies and their shareholders or "members". These particular provisions have been fast-tracked so that businesses may, at the earliest opportunity, benefit from the new efficient regime. However, a company may not simply start e-mailing its members immediately. Certain requirements are in place to ensure that the company is authorised to use e-com and to ensure its members are aware of the new system.
Authority and Consent
A company's articles of association may already contain provision for e-com in which case it is business as usual. If they do not, a resolution will be required authorising its use. The Company is also permitted to place information (such as content of a proposed resolution or meeting) on a website for viewing by members but it must also either be authorised by its articles or by member's resolution.
Each member must be asked for his consent to receive e-com and if there is no response within 28 days, that member is deemed to have consented. If a member responds to indicate he does not consent, the company must provide hard copies at no cost to that member.
Furthermore the company may not then ask that member for his consent to e-com within the next 12 months.
The company must notify its members whenever information is published on the website but it may do this by e-mail. Each member must provide to the company an e-mail address that may be used for this function.
Beyond E-mail
The Act also allows companies to communicate otherwise than by means of hard copy and e-mail; which would include SMS text messaging. However, a potential drawback of text messaging may be the difficulty in recording whether such information was sent, though it is an option for businesses. The same rules of authority and consent as detailed above apply.
Benefits
The ease of electronic communication will greatly reduce the administrative burden felt by companies in instances such as posting general meeting notices to members. It will reduce the cost both in terms of man hours and postage and will allow easy communication with shareholders.
For further information please contact:
Either Mark Michie on 0131 226 8204 or email mark.michie@mbmcommercial.co.uk.
or Ross McGregor on 0131 220 8849 or email ross.mcgregor@mbmcommercial.co.uk