This may make it the first public issue to go through the paperless mode considering that the Concor disinvestment which took place through the depository was a private placement.

The telecom giant has written to the government as well as SEBI about its decision to offer only demat shares in a bid to avoid creating any fresh paper.

VSNL conveyed its views to SEBI chairman DR Mehta at the meeting of the compliance officers of 12 companies shortlisted for mandatory demat trading from January 4 onwards. The meeting was held on Thursday to assess the feedback from companies which will bid goodbye to paper in a fortnight.

The SEBI chairman has welcomed the move and conveyed to the company that this practice should be adopted by all companies. SEBI, on its part, is expected to shortly announce the date from which all public issueswould be mandatorily in the demat form.

The registrars have already conveyed to SEBI their acceptance of issuance of shares only in the paperless form. The markets regulator has already held meetings with market participants and the National Securities Depository Ltd in this regard and is expected to shortly come out with a date from when this measure would be mandatory.

It will also prescribe the format on the lines of the NSDL module for primary market allotment which is ready with the depository.

SEBI is also keen to see the number of investors who have opened accounts with the depository go up significantly, or else it could lead to a situation where only a small part of the investor community would be able to subscribe to an issue. This would harm investors as well as the issuer who would be unable to tap a large number of investors.

However, for companies like VSNL which form part of the securities in which only demat trading will be allowed, it makes sense to allot shares only in paperlessform. When an investor knows that he can sell these shares only in the paperless form, it makes little sense for him to apply for physical shares and pay the cost of dematerialisation before being able to sell them.