The new year has
brought with it new possibilities for companies with respect
to communicating with shareholders (and debenture-holders)
electronically. The provisions in the Companies Act 2006
(the 'Act') allowing electronic communications were the
ones which, according to the government, businesses most
wanted to see brought forward. These provisions came into
force on 20 January 2007 and allow companies, provided
certain requirements are met, to communicate with their
shareholders via e-mail and via their websites. So what
does this mean for companies with shares listed on AIM,
who have to comply with various AIM Rules specifying that
certain documents have to be sent to shareholders. Can
they take advantage of the new flexibility?
The answer is yes. The London Stock Exchange has issued
AIM Notice 26 in which it confirms that companies that
communicate with their shareholders electronically in
accordance with the relevant parts of the Act that came
into force on the 20th will be deemed to be complying
with those AIM Rules that require documents to be sent
to shareholders. Thus it will be possible for AIM companies,
provided they have complied with the requirements in the
Act, to send the following documents electronically to
shareholders:
-
the annual accounts
pursuant to Rule 19; and
-
an admission
document pursuant to Rule 14 (the reverse takeover rule)
(subject to the requirements, in particular, of the
Prospectus Rules should the document also be a Prospectus).
Companies should, however,
note the following:
-
all matters
required to be "notified" under the AIM Rules
must still be notified via a Regulatory Information
Service, as the Rules require; and
-
AIM companies
and their advisers should note the continuing operation
of AIM Rule 20 which requires all documents provided
by an AIM company to its shareholders to be made available
to the public for at least one month, as well as e-mailed
to the Exchange. The guidance note to this rule already
allows such documents to be made available to the public
via a website address.
In terms of the requirements under the Act, briefly, a
company will be able to communicate with a shareholder
by e-mail if the shareholder has agreed to the use of
e-mail, either in respect of a particular document or
in respect of documents in general. A shareholder who
so agrees will need to provide the company with an e-mail
address. A company will be able to send a document to
a shareholder by posting it on its website if the shareholder
has agreed to that method of communication, either in
respect of that document in particular or in respect of
documents in general. The company is, however, required
to notify the shareholder that the document has been posted
on the website. A shareholder will be deemed to have agreed
to website communication (a much more liberal regime than
that currently in existence) if:
-
the company
has internal approval to communicate in this way, either
through a shareholder resolution or through a provision
in its articles; and
-
the shareholder
has failed to respond (within 28 days) to a request
from the company to agree to communication by means
of its website.
The 2007 AGM should provide a good
opportunity for the necessary shareholder resolution,
and companies should then be thinking of including requests
to agree to website delivery in their next posting.
Of course we must not forget the
other proposed changes relating to AIM companies' websites.
The Exchange is currently considering the responses it
has received to its proposals for a new requirement in
the AIM Rules for all AIM companies both to have a website
and to post on it all core management and financial information.
Investors would be able to find on the website the admission
document, annual report, all regulatory news service announcements
for the past 12 months and up-to-date biographies of the
directors. The website must also say where the company
is incorporated, the level of free float in the shares
and details of other exchanges where its shares can be
traded. We are promised a response on this (and the proposed
new rulebook for Nomads) "shortly".
© Davenport Lyons 2007. All
rights reserved.
This document reflects the law and practice as at January
2007. It is general in nature, and does not purport in
any way to be comprehensive or a substitute for specialist
legal advice in individual circumstances.
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