ShareSoc definitely recommends that shareholders in a company read its Annual Report – not necessarily all the detail but as much as necessary to get some understanding of the company’s situation. 

Over 95% of ShareSoc members are happy to receive our newsletters in electronic form. Some read them “on-screen” while others print them out before reading (at less than twenty pages, this is not very costly). However, many members still prefer to receive Annual Reports in paper form. For large companies they can be more than 100 pages long and are not always well designed to print on a home computer printer. Reading a 100 page document on-screen is also rather tiresome, particularly as they are not designed to fit onto a normal screen size. If you have many stocks in your portfolio, it can also be costly to print all the Annual Reports – centralised printing is much cheaper and produces a much better quality document. In addition shareholders are not happy to have the cost of printing transferred from the company to themselves.

What is the Legal Position?

The distribution of Annual Reports is governed by the Companies Act 2006. Every company must send a copy of its annual Report and Accounts to all members (Clause 423). This can be either via post or electronically. An offence is committed by the company and its directors if they do not do so (Clause 425).

Paper or Electronic?

A company is permitted to send the Annual Report by electronic means if the member does not opt-in to receive a paper copy, and they must be given the opportunity to opt-in by being sent an appropriate form. This is normally done when a member becomes a shareholder and can be done at any later date in addition—if there is no response then the member is assumed to have consented to electronic delivery

Note that making a document available on a web site is deemed to be delivery if the company’s Articles permit that, and the company has notified the intended recipient of its availability and where it can be found. Best practice is of course to send a paper notice of the Annual General Meeting (including a proxy voting form), and a notice where the Annual Report can be found at the same time.

See Schedule 5 of the Companies Act for where these options are defined. The Institute of Chartered Secretaries and Administrators (ICSA) can also provide guidance on these matters.

Who is a Member?

Members of a company are the shareholders who are on the share register, i.e. those who hold their shares in certificated form or in a Personal Crest Account.

What About Nominee Accounts?

If you hold shares in a Nominee Account then you can still obtain Annual Reports in electronic or paper form, if your stockbroker requests them (for example, the Share Centre has systems to enable these to be supplied). But many brokers do not bother to support this.

Expense is Not an Excuse

Some companies argue that they cannot afford to print Annual Reports, but they only need to do so for those members who have opted-in for paper. And there is a clear legal obligation to do so for those who have. 

Other Information

Interim reports are a different matter and many companies have now stopped printing those. They can of course be obtained, plus preliminary results and other announcements via a Regulatory News Service (see the Links page of the ShareSoc web site for sources of such news). Shareholders in a company should register with one of these services so they get sent all news published by the company as soon as it is issued via e-mail. Many companies also allow you to register to receive news on their web sites.