Marcus Cake

The use of the internet to distribute information is obvious. The finance sector is largely information based. The potential of the internet to distribute is yet to be exploited. In some countries, rules and regulations governing securities market often required company information to be delivered to shareholders in hard-copy form.

SEC OKs e-delivery of shareholder information, News.com, 29th January 2007

Extract:

• Companies issuing information to shareholders will at last be allowed to use the Internet as a legal method of delivery beginning July 1, 2007, according to new rules published by the U.S. Securities and Exchange Commission last week. Current rules require proxy materials and annual reports to be delivered in hard-copy form unless a shareholder specifically requests electronic delivery.
• Under the new rules (click to see PDF of the SEC regulations), companies can choose to use an electronic method of notification for anything except certain types of business transactions. The information for an entire shareholder meeting must be posted on a public Web site in formats conducive to reading online, as well as printing in hard copy. Shareholders also must have the ability to vote anonymously either through a Web site or by phone.

The electronic distribution of shareholder information will reduce costs and provide immediate delivery of information to shareholders. Electronic delivery may bypass established channels for information delivery and may accelerate disintermediation. However, the change is likely to be a universally positive for market efficiency with more direct communication between a company, its shareholders and advisers. It may also be possible that reduced transaction costs could lead to improved access to capital markets by smaller companies.