Does your company use email for sending documents or information to shareholders?

The rules are:

•  A company may only send by email documents or information to a shareholder or other person - a director for example - if the person has agreed (generally or specifically) that the particular document or information may be sent to them by email (and has not revoked that agreement); and
• the company may only send the document or information to the email address that the person has specified for that purpose (generally or specifically).

So if a company wishes to send company documents (for example written shareholder resolutions or notices of meeting) by email to every shareholder, it must have received from every single shareholder in advance:

• the shareholder’s consent (that has not been revoked) to the company using email for that purpose; and
• the particular email address that the shareholder requires the company to use for that purpose.

These are part of the company communication provisions in sections 1143 to 1148 and schedules 4 and 5 of the Companies Act 2006. They “have effect for the purposes of any provision of the Companies Acts that authorises or requires documents or information to be sent or supplied by or to a company.”

Articles of association or a shareholders’ agreement or another document may also provide for these rules to apply for the purpose of any communication under that document.

Your company may have been emailing shareholders without having these consents in place. Technically those communications would not have been valid.

We recommend that you obtain the necessary consents from each shareholder and director individually and keep detailed records. The time may come when you wish to rely on those consents or you may wish to justify that the documents have been circulated validly.