And now it is the turn of corporate India to go green and follow steps to ensure conserve nature and environment. Thanks to the green initiative taken by Ministry of Corporate Affairs (MCA) of Central Government recently whereby the age old system of serving of document by corporates to its shareholders by physical mode under posting certificate (UPC) has been relaxed. With such a non- mandatory directive from MCA, many companies, especially the big ones with large shareholders base and those who are good governance conscious have responded to this initiative positively by requesting their shareholders to agree for electronic documents such as annual report.
The Ministry of Corporate Affairs has taken a “Green Initiative in the Corporate Governance” by allowing paperless compliances by the companies after considering provisions of the information Technology Act, 2000 for legal validity of compliances under Companies Act through electronic mode. Companies Act, 1956 provides service of documents under ‘Certificate of posting’ as one of the accepted mode of service. Whereas the Department of posts has recently discontinued the postal facility under ‘Certificate of posting’ vide their letter dated 23.02.2011, the Information Technology Act, 2000 also permits service of documents etc., in electronic mode.
Based on the MCA Circulars towards green initiatives, companies can now send various notice/ documents (including notice calling annual general meeting, audited financial statements, directors report, auditor’s report etc) to their shareholders through electronic made (viz, email) at the registered email addresses of shareholders of the company. The full text of reports statements etc. will also be available to shareholders on company’s website and be sent to shareholders in physical form on request without any extra cost. Physical copies will also be available for inspection during office hours at registered office.
Thus, compliance will be deemed to have been done where service of documents has been made through electronic mode. In case where any member has not registered his email address with the company, the service of documents will have to be affected by other modes of service.
This is major step forward in India where companies can now use electronic mode. Recently, Government also announced such green initiatives in corporate governance by allowing paperless compliances for various filings. Also, for holding general meeting of shareholders, companies can use audio visual electronic communication with proper access. It will be an obligation on company to ensure proper video conference equipment or facilities, ensure that no one other than shareholders attends the meeting, prepare minutes and safeguard the integrity of the proceedings through video conference. Companies would provide for conference connectivity for general meetings atleast at five centers so that it covers top five cities. Similarly, board meetings could also be held by electronic mode.
Companies such as GTL, Reliance Industries, Hindustan Unilever, Shree Cement, Piramal Health, Godrej, etc. have already taken steps in this direction which will save lot of paper and costs. ‘Go Green initiatives’ offers win-win situation – reduction in printings, paper costs and postage expenses for companies and also help in keeping our planet earth green and cool. As an investor, let’s be a part of this green initiative and contribute towards social corporate responsibility.