Monday, April 25, 2011

Investors to get e-mails as India Inc sent on green drive

NEW DELHI: The government has asked corporates to communicate with their shareholders electronically in order to cut down on the use of paper .

The move is part of the latest 'green initiative' by the ministry, but could also help companies cut costs by obviating the need for paper-based communication. Under the Information Technology Act, 2000 service of documents in electronic mode is considered valid delivery.

The ministry of corporate affairs has directed all companies to maintain a formal register of valid e-mails of all its shareholders where key communication like notices of company meetings can be send.

Currently, companies are required to communicate with their shareholders through the postal route.

The ministry has informed its regional directors as well as the registrar of companies of its decision, asking them to ensure that companies start electronic communication.

"We have to give a certain period of time for this transition to take place," said an senior official in the ministry.

The ministry has earlier initiated steps to ensure electronic filing of documents by companies. As per the directive, companies will give sufficient time to its shareholders to get their e-mails registered so that they are do not miss on any of the notices and circulars sent by their companies.

Companies have welcomed the move.

"It is desirable that electronic means of communication is increasingly recognised under the law and in that terms the government's directive is welcome," said Ashok Haldea, director, PTC India Financial Services Ltd.

The trigger for the move came from a decision of the country's postal department has decided to discontinue their postal facility under 'certificate of posting' route, which allowed companies to send out bulk mails.

Using normal postal facility will not only be expensive but also cumbersome for corporates.

Use of electronic means can definitely reduce costs for companies, says Mr Haldea, but cautioned that cost savings should not be the primary driving force behind the use of electronic communication means.

"It is the quality of communication and effectiveness of the process that should be the key reason for the change," he said.

The government's direction is clear that till the time any shareholder has updated his e-mail address with the company, all communication will be made in the physical form to their registered address.

Many shreholders may not be comfortable in dealing with paperless communications or access to the necessary infrastructure. This will ensure that they are kept in the loop.
source---The Economic Times

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