Listed Companies need not send hard copies of annual reports till 31.12.2022

The Ministry of Corporate Affairs (MCA) has approved the holding of the Annual General Meeting (AGM) in electronic mode until 31 December 2022. This relaxation includes the freedom to send hard copies of annual reports. But the question arises as to whether the listed organizations are exempt from sending hard copies of the FY22 annual reports based on this MCA exemption or if there is any necessary relaxation under the LODR again. This article will have insight into the listed Companies need not send hard copies of annual reports till 31.12.2022.

Notice of Listed Companies need not send hard copies 

SEBI, considering the MCA vide Circular dated 5 May 2022, extending the relaxation of the physical copies of the 2022 annual report has decided to grant relief to the listed company regarding the requirement to send a copy of the annual report papers to non-convertible debt shareholders under Regulation 58 (1) of LODR who have not registered their e-mail addresses with the listed business or any savings account by 31 December 2022.

Features of the notice

• Given the above, it has been determined to provide for relaxation until 31 December 2022, of the requirements of Regulation 58 (1) (b) of the Listing Regulations which stipulates that a company with non-convertible securities must submit a copy of the statement containing the essential features of all documents, as defined in Section 136 of the Companies Act, 2013 and the rules made under that for those non-convertible security holders who have not registered their e-mail addresses may have a listed business or any asset.
• This Circular will come into effect immediately. Stock Exchanges were advised to bring the provisions of this circular to the notice of all non-convertible listed securities and distribute them on their websites.
• The powers are conferred on it under Section 11 (1) of the Securities and Exchange Board of India Act, 1992 (read with Regulation 101 of the Regulations for Listing) to issue such notice.

Status in 2022

As mentioned above, the MCA extended the AGM/EGM held by VC or OAVM following the framework set out in this regard by the MCA Circulars stated, in particular as the MCA circular dated 5 May 2020, there is a physical exemption for annual reports of all companies conducting the AGM at VC/OAVM up to 31 December 2022. The MCA had previously extended this leave until the AGM/EGM/post voting until 30 June 2022 by circular 8 December 2021. However, no relaxation has been granted by SEBI in this regard at the 2022 shareholders’ meeting from 1 January 2022 until now.

Benefits of relaxation notice 

Below shows the benefits or the reasons why Listed Companies need not send hard copies of the annual reports. 

• Because of the transparency and consolidation of business management, shareholders should be fully aware of the essentials of a limited public company. Despite the increase in digital penetration in India, there are still concerns about small stockbrokers who have not yet reached out to technology. Good business management involves developing a culture of transparency and communication with small shareholders who have lost confidence in the company and its management. Therefore, SEBI should consider the interests of these minority shareholders and consider these issues while relaxing any rules.

• This relaxation will bring consistency and provide much-needed relaxation to companies in compliance with rigorous process requirements. Especially when efficient electronic distribution systems and updated data have been accelerated because of the impact of the epidemic.

Final words

The market regulator gave relaxation to listed companies in sending hard copies of annual reports to shareholders who did not register their email addresses until December 2022. However, the listed organizations are required to send a copy of the full annual report to the shareholders who requested the same. Also, by the end of December this year, SEBI had scrapped the requirement to submit proxy forms in the event of a general meeting to be held in electronic mode. Thus the discussion is all about listed Companies who need not send hard copies of the annual reports.

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