The UK’s accounting watchdog has risked antagonising investors by saying that listed companies should be allowed to stop printing hard copies of their annual report and accounts.
The Financial Reporting Council has proposed permitting the publication of these key shareholder documents in online format only, arguing that the printed version had been left behind by the explosion in internet-based communication.
“It is an enormous waste of paper and an enormous waste of time, and a waste of money,” said Stephen Haddrill, the FRC’s chief executive. While listed companies do not have to send printed copies of their full annual report and accounts to investors automatically, they are obliged to provide them on request. One FTSE 100 company sent out 22,000 copies last year.
The documents can run to hundreds of pages. “We have been concerned for some time about the ballooning of reports,” Mr Haddrill said.
The HSBC 2006 annual report and accounts was the most notorious doorstop, weighing in at 454 pages and 1.5kg. The bank said at the time that Royal Mail had limited the number of copies carried by its postmen for fear of back injury.
The FRC hopes that relieving companies of the burden of providing printed annual report and accounts on request would enable them to focus on making their web versions more user-friendly and searchable.
Mr Haddrill played down the contentiousness of the move, saying: “Anyone who is investing in a business . . . is almost certainly likely to be pretty web-savvy.”
But Martin White, chairman of the UK Shareholders’ Association, a private investor body, said: “There will be plenty of people who will not be happy about this.
“You are stopping people who do not have access to the web from getting hold of it.” The mooted shift to online-only annual report publication is part of a package of changes to financial reporting and auditing proposed by the FRC, including greater involvement of shareholders in the appointment of auditors.
It also wants more to be disclosed about the work of audit committees – the non-executive directors who oversee a company’s auditors.
The deadline for responses to the FRC’s proposed changes is March 31. The watchdog said it would also consult on whether any reforms would apply to all listed companies or a smaller group of businesses.