Mark Hynes - thoughts on corporate disclosure

Opinions on changing rules, changing best practices, and their effect on investor relations officers.

Tuesday, October 10, 2006

Investors have to “opt in” to hard copy reporting; electronic communication becomes the default.

Among the 1264 clauses of the new Companies Bill currently working its way through Parliament, are those which present much for Investor Relations Officers to think about. Gone is the obligation to provide a hard copy annual report, interim report etc to investors; in is the obligation to provide electronic access (through a company’s website) to these documents, with delivery of printed materials obligatory only to those who insist.

At first sight, there would appear to be significant room for cost savings. Annual report print runs of 50,000 copies are not uncommon, especially in the old privatisation stocks, and given the fast rising length of an annual report, (through rising compliance obligations), the costs are a major part of an IR budget. And some companies have long held the view that some of these (expensive) reports simply wind up in the bin.

However many companies will be cautious about seizing this opportunity, fearing a PR disaster. Institutional investors are noted for wanting the hard copy and retail investor organisations are already highlighting that some individual investors have no web access – or will resent having the print costs effectively transferred to them.

Nonetheless, the changes under the Companies Bill will present opportunities for companies to provide customised versions of these materials. The “compliance” document will still be needed, but companies with large groups of retail shareholders (eg the ex-privatisation stocks – BT et al) will create a simple to read summary. Meanwhile for their institutional investors, companies are likely to create ‘deeper’ versions of their annual reports, with extra financial analysis or strategic considerations, etc. They will wish to target these at the sell side and to the buy side, in their sector.

Delivery of these new documents will be a challenge. The default being electronic, investors who have not replied within 28 days to a company’s announcement of a move to electronic communication, will be deemed to have opted in. However, the company may well NOT have an email address for all investors, and will not wish to rely on investors ‘pulling’ the information from their website.

Instead, companies will want to look at news releases, webcasts, podcasts, and other media to deliver materials.


  • At 12:50 pm, Anonymous Richard Carpenter said…

    Anyone wanting more information on this subject can access Radley Yeldar's White Paper on the issues involved at link below:


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