Langley Twigg Law Hawke's Bay

The Regulatory Reform Bill is currently before the Select Committee with the expectation that it would be passed into law this year.  The Bill would amend 13 Acts, including the Companies Act 1993 (“the Act”) with the aim to remove duplication, unnecessary requirements, inconsistencies with other Acts, and also to reduce compliance costs for NZ businesses. The key changes affecting the Act include those involving electronic voting and receiving electronic notices.  It has been estimated that the changes to the Act could result in savings of up to $1,500,000.00 in total for businesses per year. 

Electronic voting is widely used in overseas jurisdictions and would enable increased shareholder participation in corporate decision making and reduce costs for companies having to deal with postal votes and proxy forms. The changes would enable shareholders to use internet-based technologies to attend meetings and participate in voting by way of audio, visual or electronic means for example, casting votes by email or on a website. Previously the legality of voting electronically had been a grey area.  It is important that the ability to contribute electronically includes the opportunity to hear or view information being presented and to put forward questions to the board and management. 

While it would seem that there would be less discussion opportunities for those participating electronically, this would be offset by the increased number of shareholders who could actually participate in a meeting and contribute via the voting system. 

The Companies Act which governs the means of sending notices and other documents to shareholders will also be amended to make it clear that shareholders may opt to receive notices electronically.  This will make it easier for shareholders to cast a vote without attending a meeting, appointing a proxy or casting a vote by post and makes receiving notices and other company documents electronically more convenient. 

It is up to each individual company to decide whether it is in the best interests of that company to opt in to using electronic shareholder participation for company decisions, and for shareholders to “opt in” to receiving communications electronically.   

Does the reduced printing and postal costs, travel costs for staff and shareholders and labour costs in collecting and processing postal votes justify the initial outlay in setting up those internet-based technologies.  If so then electronic voting and notices is the way of the future. 

Written by Graham Healey