With the Ministry of Company Affairs permitting companies to send the annual reports through e-mail to their members, prominent companies with very large shareholder base have started seeking members' nod/sending the annual reports to their shareholders through e-mail, with Reliance Industries Ltd seem to be one of the first off the block by sending a 216-page annual report by e-mail!
While the move is laudable in that it would help preserve the green cover by saving trees that are felled to manufacture pulp that go into the production of paper, in a country where the Internet is still to make a deep penetration, it may be quite some time before the shareholders warm up to the idea of paperless mode of communication.
cloud computing
While there may also be questions as to whether the bandwidth in the country is capable of coping with the surge in e-mail traffic during the annual results season, the advances made in cloud computing may make this easy.
But the trophy hunters who preserve the annual reports for ages would not be miffed by the idea of having to store their annual reports in their systems since companies would continue to send printed copies of annual reports to shareholders who want to receive them!
M&M, RIL lead the way
In a communication to its shareholders a few days back, automobile major Mahindra and Mahindra Ltd said that the MCA had taken a ‘Green Initiative in the Corporate Governance' by permitting ‘paperless compliances by companies'. In its circulars issued in April, MCA had inter alia stated that a ‘company would have complied with Section 53 of the Companies Act, 1956, if the service of document has been made through electronic mode', M&M said. M&M said it welcomed the move since it will lead to ‘reduction in paper consumption and contribution towards a Greener Environment', besides ensuring ‘prompt receipt of communication and avoid loss in postal transit'. The company said that it proposes to ‘send documents like notice calling the annual general meeting, audited financial statements, directors' report, auditors' report etc. for the year ended March 31, 2011, onwards and other communication, in electronic form, to e-mail addresses of those members which are available in the records of the company'.
However, with a view to serve the needs of such of those shareholders who might still want to receive printed copies of these documents, M&M said that those shareholders desirous of receiving the documents mentioned above in physical form, should send an e-mail to the company before May 20 failing which it would be presumed that they have opted for receiving documents from the company in electronic form.
The company assured its shareholders that they were entitled to be furnished, free of cost, with a copy of the balance sheet of the company and all other documents required by law to be attached thereto. However, it hoped that ‘as a responsible citizen, you would appreciate the “Green Initiative” taken by MCA and your Company's desire to participate in such initiatives and will whole-heartedly support the same' (electronic mail).
RIL, like M&M, assured that the members were entitled to be furnished, free of cost, with a copy of the balance sheet of the company but was sure that the members ‘would appreciate the Green Initiative taken by MCA' and RIL's desire to participate in such initiatives. Given its retail shareholding base of about 35 lakh shareholders, the savings in postal cost alone would be phenomenal for RIL.
Apart from helping to preserve the green cover, the latest e-initiative by the companies would help them save enormous cost in printing and postal charges. How many companies would embrace this concept remains to be seen but this is really a welcome step in protecting green cover in the country!