Most investors buy shares to make money, but buying a stake in a company also offers the chance to participate in the decision-making process.

Shareholders have the right to attend the Annual General Meeting (AGM), ask questions of the board of directors and vote on any resolutions put before shareholders. They are also entitled to receive information about important company business, such as bid approaches.

However in recent years many shareholders have not been able to exercise these rights because they have joined the growing numbers of people who hold their shares in nominee form, such as investors in Individual Savings Accounts (ISAs), or Self Invested Personal Pensions (Sipps). This meant that, until recently, companies were not obliged to send them communications such as reports, details of bid offers or invitations to the AGM, as they would with shareholders holding paper certificates.

This was a great pity as it made it very difficult for nominee shareholders to exercise a role as active investors, when a solid core of active investors is actually a very healthy thing both for the investors themselves and the company in which they have a stake. The set-up tended to encourage a passivity which left all the decision-making even more firmly in the hands of the institutions, with the disenfranchised small investor looking on from the sidelines.

But now things are set to change, following the introduction of the new Companies Act this October. It allows nominee operators such as stockbrokers and Isa providers to give to company registrars the e-mail or mailing address of nominee shareholders who wish to opt in to receiving company communications. From January 1 2008 all UK-listed companies will be required to send communications to these investors just as they currently do with shareholders who hold certificates.

Organisations such as the Share Centre, which have campaigned tirelessly for this change in company law, hope it will provide a real boost for shareholder democracy. But this will only happen if shareholders themselves grasp the opportunity that the new law offers and once again become active, rather than passive investors.

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