How to implement new Reg. FD web disclosure – a legal opinion
As many of you know, over the past several weeks I have been speaking with issuers of all sizes across North America – both U.S. and Canadian inter-listed companies – regarding their transition to a web disclosure model.
Most of the companies I’ve spoken with are intrigued by the potential cost savings of disseminating their disclosure without the expense of newswires. Some of the companies I’ve spoken with are busy putting plans in place to meet the new SEC criteria. Others have been made to fear that adopting this method of disseminating information to the market would prevent them from attaining simultaneous disclosure.
Most are wondering what steps they need to take to transition to this model. Although I have dealt with this more specifically in previous blog posts, here is my 1,000 foot perspective:
1. Inform yourself of what’s possible from a technical standpoint and obtain opinions from a number of sources. To optimize web disclosure according to the SEC’s new guidance, your goal should be to investigate technologies that enable you to easily meet the SEC criteria while minimizing risk for your company. You may have to pay more than you do now for this technology, but taking control of your own distribution will allow you to reallocate some of your newswire costs to ensure a more effective web presence.
2. Seek strategic communications consulting from experts well versed in IR best practices. Your corporate and investor web site is your most powerful stakeholder communications tool, if properly utilized and promoted. Choosing the right web platform and distribution technologies is only one half of the equation – having a strategic approach to your web communications is the other half. Over the years this has become a science in terms of required/expected content, how to structure the site, how to present your information for maximum impact and usability etc.
3. Seek independent legal counsel in order to plan your company’s response/transition.
It is to this end that I bring you an excellent article – a legal opinion penned by Colin J. Diamond, a partner in the securities group at the New York office of White & Case LLP – on ‘How to Implement the SEC’s New Guidance regarding the Use of Company Web Sites’. This recent article appeared in the November/December 2008 edition of The Corporate Governance Advisor.
The article is very easy to understand and comprehensive in its approach. Colin examines each aspect of the SEC guidance and deals with it in detail. I have provided an excerpt from the article below – a great chart that examines key factors of the SEC guidance along with how to respond to each. I highly recommend that you read the entire article and use it (or something like it) as a foundation on which to examine how to approach the guidance from a technical and communications standpoint.
|
Factor |
Steps Recommended to Satisfy Factor |
| Whether and how companies let investors and the markets know that the company has a website and that they should look at the company’s website for information. | - Include the address of the website in Forms 10-K, 10-Q and 20-F, and in all press releases.- State in each of those documents that the company routinely posts all material information to its website.- Consider referring attendees at investor conferences to the website. |
| Whether the company has made investors and the markets aware that it will post important information on its website and whether it has a pattern or practice of posting such information on its website. | - Post all press releases and other important information consistently to the website.- Disseminate or post advance notice of the date of earnings releases and calls and other material events known in advance. |
| Whether the company’s website is designed to lead investors and the market efficiently to information about the company, including information specifically addressed to investors, whether the information is prominently disclosed on the website in the location known and routinely used for such disclosures, and whether the information is presented in a format readily accessible to the general public. | - Ensure that the investor relations portion of the website is readily accessible. This can present a challenge for companies whose websites are used primarily for sales; however, it is now important to ensure that the investor relations link is easily located.- Redesign investor relations pages so that all recent press releases are immediately visible without having to click to a separate news page.- Ensure that different categories of press release are appropriately segregated (e.g. , earnings releases should be separate from business/commercial releases). |
| The extent to which information posted on the company’s website is regularly picked up by the market and readily available media, and reported in such media or the extent to which the company has advised newswires or the media about such information, and the size and market following of the company involved. | - The websites of large-cap companies are likely to be better followed by the media than those of small-cap companies. Small and medium cap companies should consider continuing to disseminate advance notice of earnings releases by press release; however, the earnings release itself can then be posted on the website and not disseminated by newswire services. [1] |
| The steps the company has taken to make its website and the information accessible, including the use of “push” technology, such as RSS feeds, or releases through other distribution channels either to widely distribute such information or advise the market of its availability. | - Consider using “push” technology, such as RSS feeds or e-mail alerts, as it is one factor that may be considered in evaluating the accessibility of the information.- If “push” technology is implemented, ensure that company information, such as press releases, is distributed via the push technology. |
| Whether the company keeps its website current and accurate. | - Companies should ensure that all releases are posted promptly to their websites.- Companies should archive press releases on a rolling basis after a certain period has passed so that the website is uncluttered and material information is easily accessible. |
| Whether the company uses other methods in addition to its website posting to disseminate the information and whether and to what extent those other methods are the predominant methods the company uses to disseminate information. | - Companies that wish their websites to meet the SEC’s requirements should take steps within these guidelines to make their websites the primary source of information for investors. |
| The nature of the information. | - Routine information will be more amenable to website dissemination. Particularly for small and medium cap companies, extraordinary, material events, such as acquisition announcements, Chapter 11 filings, etc., should generally continue to be disseminated using a newswire service or Form 8-K filing. |
[1] Note that an earnings release will in any event need to be filed with the SEC pursuant to Item 2.02 of Form 8-K.
Related posts:
- How to make your website a “public” disclosure channel under new SEC guidance and RegFD
- SEC Guidance enables corporate websites and blogs to be fair disclosure
- Web Disclosure Adoption On the Rise
- Legal, Social Networking and Financial Expertise Help IROs Stay on Top of Game
- Q4 WEB – An Important First Step in the New Reg. FD Web Disclosure Model
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