General policy statement
The purpose of this Bill is to amend the Companies Act 1993 to reduce costs on companies by removing the requirement to provide a written notice of the annual report to shareholders. Currently section 209 of the Act requires companies to send a hard copy of their annual report or a notice (“s 209 Notice”) asking if shareholders would like to receive a hard copy of the annual report.
Section 209 was originally intended to ensure shareholders have access to information contained in a company’s annual report. Now, digital communication has become the primary means by which investors in listed companies obtain information about a company. Digital communication allows for much more information to be conveyed, more quickly, cost effectively and with little environmental footprints.
Recent changes to legislation have removed the requirement to record the names of substantial holders on the s 209 Notice, further diminishing its purpose. Section 209 should be amended so that the requirement to send a s 209 Notice or hard copy of the annual report is removed, provided listed and other issuers are required to maintain a copy of the annual report on their websites and send a hard copy on request.
The requirement to send a s 209 Notice is redundant in the digital age. It imposes costs on companies which provide little or no benefit to shareholders and represents a significant environmental burden.
Nothing about these changes will remove the ability for companies to continue voluntarily sending notices similar in nature to a s 209 Notice, nor will it prevent companies from voluntarily sending hard copies to shareholders. Companies will also now be required to make annual reports available electronically and must at least once directly notify each member in writing that they have a choice to receive annual reports by printed copy or electronically.