Tuesday, April 26, 2011

Email notice to shareholders from now onwards | Green move from companies

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 communication.Under the Information Technology Act,2000 service of documents in electronic mode is considered vaild 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 emails registered so that they are do not miss on any of the notices and circulars sent by their companies.The governments direction is clear that till the time any shareholder has updated his email address with the company,all communication will be made in the physical form to their registered address.However,companies may not have any choice in the matter.The countrys 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.As companies are required to inform their shareholders of several activities like their annual general meetings,it is necessary that shareholders inculcate the habit of accessing their emails so that they are kept informed of all corporate announcements.

The ministrys electronic filing system ensures that companies are relieved of not filing loads of documents required as part of their compliances in their physical form and rather submit its scanned copies in an electronic format.