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Paperless shareholder reports to save Rs 500 cr

Late last month,the government allowed companies to send documents to their shareholders electronically.

Written by Agencies | New Delhi |
May 6, 2011 3:20:16 am

Corporate India stands to save about Rs 500 crore following a government directive that allows them to send paperless annual reports and other shareholder documents in electronic format through emails.

Cashing upon the opportunity,which has been created by a ‘green’ initiative of the government to cut down on paper use in corporate communications to investors,the companies have started seeking their shareholders’ nod for emailed reports instead of bulky paper documents.

Typically,printing of an annual report costs a company anything between Rs 40-150 a piece,depending on the quality and colour of the documents,said an official with an agency involved in printing of such reports.

Taking into account an average size of 40,000-50,000 shareholders of about 3,000 companies whose shares are actively traded in the stock market,printing of annual reports cost these companies a minimum of about Rs 500 crore.

Typically,companies print black-and-white reports with average print quality for small shareholders,while a few thousands of copies are printed in better quality for distribution to fund managers and institutional investors.

All the companies are required to send individual shareholders a copy of annual reports and various other documents as per the regulatory framework.

However,the companies have been now given an option to send these reports through email in paperless electronic form,following which they may save on their printing costs.

The savings could be much higher if the unlisted companies are also taken into account,as the Ministry of Corporate Affairs’ green initiative applies to them also.

Another official with a leading depository,which handles investor communications for a large chunk of listed companies,said that the cost saving could be a minimum of Rs 100 crore.

There are about 1.9 crore demat accounts in the country,which pegs the number of stock market investors at about 1.5 crore after taking into account those with more than one demat account and those not very active in the market.

Even if every stock market investor gets only one annual report a year,the savings could be in the range of Rs 60-225 crore,depending on the quality of the report,he said,adding that there are other documents also where costs would be saved through paperless emailing of reports.

Late last month,the government allowed companies to send documents to their shareholders electronically.

These documents include notice convening the shareholder meetings,financial statements,annual reports and the new directive would also be effective for annual reports for the year ended March 31,2011.

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