David Prosser: Don't call time on the annual report
Saturday 08 January 2011
Outlook: There are less than three months to save the annual report – in its printed form, in any case.
The Financial Reporting Council, the accounting watchdog, is proposing to drop the requirement thatcompanies print hard copies of their annual report and accounts (despatching these documents to all shareholders has not been mandatory for some time, but they must currently be supplied to those that request them), on the grounds that anyone who wants the information contained can find it online. Investors have until 31 March to make their views known.
My suspicion is that the FRC will be surprised by the amount of feedback it gets. Stephen Haddrill, its chief executive, isn't expecting this to be a contentious issue because he thinks most people who own shares will be pretty clued up about technology. That overlooks the fact that many owners of shares are older – and without wishing to suggest that elderlypeople aren't computer savvy, the penetration of home internet access is lower among pensioners than other population cohorts.
In any case, if shareholders wish to receive a printed annual report – whether they're eight or 80 – why shouldn't they have the right to do so? They are the owners of the company, after all.
The FRC says the documents are a waste of time and money, not to mention paper. There may be some truth in that, but it's not as if companies will be able to stopproducing annual reports – they will only save on printing and postage costs if the FRC gets its way. And there are ways to save costs while still publishing hard copies – the vast tomes some companies put out are far larger than they need to be in order to comply with regulatory requirements.
People value printed information about their investments. The Independent continues to publish a comprehensive listing of share prices each day, despite that information being accessible online too. One reason we do so is that changes to the listings have always resulted in bulging postbags, with many readers making it clear how useful they find the data.
This is what consultation exercise are for. And if Mr Haddrill's experience mirrors our own, with large numbers of shareholders asking for the status quo to remain, he should think again.
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