Legal requirements

The implementation of the Transparency Directive by EU member states – the deadline was 20 January 2007 – has brought about significant changes for corporate reporting. Publication timetables have shrunk, the requirement for preliminary results has gone and the way has been paved for companies to adopt electronic communications with shareholders as the default.

Reporting timetables and preliminary results

Companies must now publish their annual report within four months of their year-end and are no longer required to publish preliminary results. Most companies already publish within these timescales and will continue to publish prelims weeks or months beforehand. But some companies will choose to skip prelims and go straight to an online version of their annual report when announcing their results.

Note that companies are required to make five years of reports available. It makes sense also to have these on the company website.

Companies Act

Parts of the Transparency Directive requirements, including the e-communications provision, have been implemented in the UK through the Companies Act 2006. The e-communications provision allows companies to change from an opt-in to an opt-out policy for shareholders to receive information electronically. Some of the key points are as follows:

The company may need to amend its Articles of Association to allow this.
Shareholders must be informed about the change in communications policy.
Shareholders must be given the opportunity to opt-in for hard copies.
If shareholders do not respond within 28 days they may be deemed to have assented to e-communications.
They may, however, opt for hard copies at any time in the future.
The company must inform shareholders of a web address where any e-communication can be accessed.
Unless a valid email address is supplied, the company will still have to inform shareholders of the web address by post.

Legal notice

This information provides a summary interpretation of current law. It is not intended as legal advice or counsel, and is not represented as such by the author or publisher. The author or publisher makes no warranties regarding the legal acceptability of the information provided. You are advised to seek legal advice to ensure that you are complying with legislation.

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