In its bid to promote environment friendly practices, the government has allowed the companies to cut their paper costs by sending annual reports and balance sheets to shareholders on e-mail.

In the letter circulated to the Registrar of Companies and Regional Directors, the Corporate Affairs Ministry has asked them to accept such mode of communication by companies as "paperless compliance".

"The Ministry has been receiving representations from various industry bodies to dispense with the sending physical Annual Report of a company, comprising of Balance Sheet, Profit & Loss Account, Director's report, Auditor's Report, etc to its members as required under sections 219 of Companies Act, 1956."

"...and in lieu of the same the companies may be permitted to send the aforesaid documents by e-mail to it members," the MCA said in the circular.

Section 219 of the Companies Act requires companies to send a copy of balance-sheet (including the profit and loss account, the auditors' report and every other document), to every member of the company 21 days before the scheduled annual general meeting.

Companies will have to maintain a data bank of email addresses of its members and shareholders, the ministry said, adding that the shareholders should be given enough time and opportunity to get their email-ids registered, and also convey if there are any changes in such addresses.

Further, companies will have to make sure that these documents are displayed on its website well before the mandatory period and also issue advertisements in English and vernacular newspapers about the availability of such documents on its website.

"Website must be designed in a way so that documents can be opened easily and quickly," it said.

However, the Ministry said, in case a shareholder does not have an email id, physical copies of the documents will have to be sent to him/her by post.