Shift from paper annual reports hits older shareholders hardest

Industry report slams moves to impose electronic annual reports on the majority of shareholders who prefer printed material.
A recent survey* commissioned by PaperlinX found that 62 per cent of retail shareholders prefer to receive a hard copy annual report versus 34 per cent who wanted to move to internet versions. The findings challenge the move by corporations to substitute electronic communications with their retail shareholders, the majority of whom are aged over 50 with a significant 15 per cent having no internet access.

Despite claims that investors have voted to move away from print the survey found that 71 per cent of shareholders were not even aware that the legislation had changed. For many of them the lack of a printed copy of a company’s annual report effectively disenfranchises them and is likely to reduce oversight of corporate governance.

According to Rohan Dean, marketing manager of PaperlinX, the printed annual report is the only contact many elderly shareholders have with companies they invest in. “This reduced level of transparency will put many shareholders at a disadvantage, reduce governance and the ability of companies to effectively communicate actively with their shareholders,” he said.

The campaign to raise awareness of the issue stems from new Federal Government legislation that, for the first time, allows listed ASX companies to produce an online annual report, while allowing an ‘opt in’ mechanism for those who want to continue to receive a printed version. According to the findings of the survey, companies taking advantage of the electronic annual report legislation are now printing and mailing copies to less than five per cent of their shareholders.

While recognising that the printing industry has a special interest in the continuation of the printed annual report, Dean maintains that the primary motive by listed companies is to reduce costs by transferring them to the individual shareholders. He dismisses the ‘opt in’ option being promoted by some companies, pointing out that only a very small number of shareholders agreed to ‘opt in’ to receive an electronic version in the first place.

The PaperlinX funded project is the beginning of a fight back campaign by the printing industry to stem the tide of internet substitution. The production of annual reports represents a multi- million dollar business segment to the printing industry and encourages the publication of high-profile corporate communications.

*Telephone survey by independent market research house, TNS.