LIC Governance Spotlight: Shareholder Electronic Communications

28 Feb 2019


Amongst our client base, there has been recent debate whether a Listed Investment Company (“LIC”) can convert a shareholder’s communication preference to receive all shareholder communication by email, for any holder whose email address is recorded on file.

The following addresses the Corporations Act recommendations LICs should acknowledge if considering a change to a shareholder’s communication preference, without prior consent.

Notice of Meeting

Section 249J(2) of the Corporations Act 2001 (“Act”) provides that a LIC may send a notice of meeting to shareholders by either of the following methods:

  • personally;
  • by post to the member’s nominated address;
  • by fax or electronic address (if any) nominated by the member;
  • by other electronic means (if any) nominated by the member;
  • notifying the member in accordance with subsection (3A); or
  • other means that the LIC’s constitution permits.

Subsection 3A of the Act states that if a shareholder has nominated for electronic notification, then the LIC may provide the shareholder with the notice of meeting or notify the shareholder where they can access the materials using the nominated email address.

In circumstances where it is unclear how a shareholder’s email address has been collected, a LIC should not assume that the shareholder has nominated to receive the notice of meeting electronically. The use of the word “nominate” in the Act requires a shareholder to make a request for the notice of meeting to be sent by email.

Other Shareholder Communication – Dividend/Distribution Statements

The Act does not reference how other shareholder communication is to be delivered (other than subject to the provisions of the LIC’s Constitution). However, attention needs to be given to legislation that governs specific shareholder communication, for example dividend statements under Subdivision 202-E of the Income Tax Assessment Act 1997 (Cth) (“Tax Act”). The Tax Act sets out the requirements for LIC’s that issue dividend or distribution statements. A distribution statement is said to be in the “approved form” if it meets all the requirements of the Tax Act, however the Tax Act makes no provision on the service of distribution statements to shareholders.

The delivery method requirements for dividend/distribution statements in the Tax Act are ambiguous and under the Act LIC’s need shareholders to nominate whether they wish to receive their notice of meetings via email. Therefore, it is safe to form the conclusion that all shareholder communication should only be sent electronically to shareholders who expressly nominate that option.

This update is prepared by the Company Secretarial Team at Boardroom Pty Limited. The update is designed to provide general information and is not designed to replace legal or tax advice or a detailed review of the subject matter nor is it intended to cover all circumstances.

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Contact BoardRoom for more information:

Tom Bloomfield

General Manager, Growth & Partnerships
+61 2 9290 9617