Mark Hynes - thoughts on corporate disclosure

Opinions on changing rules, changing best practices, and their effect on investor relations officers.

Thursday, October 18, 2007

Funny how similar rule concepts cross the Atlantic as if by metamorphosis.

In the UK, we have been getting all excited about the opportunities presented by posting company materials on a website. The Companies Act notes that, providing that companies have changed their articles or passed a resolution, investors will have been deemed to have agreed to electronic delivery.

In the US, meanwhile, companies are getting used to the ‘notice and access’ rules that came in on July 1st. Under these SEC rules, companies can choose to supply proxy and other materials to shareholders through a “notice and access” model. A company choosing to follow the model must post its proxy materials on an internet web site and send a Notice of Internet Availability of Proxy Materials to shareholders at least 40 days before the meeting date.

Now in either case, companies will be concerned about a few things.

First, a retail investor PR disaster. Given the rising influence of retail investors in deciding the outcomes of votes on issues such as election of directors, companies will want to avoid being accused of ‘hiding’ notification of the election.

Second, making sure that the web site visited can accurately portray the materials, in a readable form. Some of the early (US) adopters have been criticised for the way in which their materials are accessed and retrieved from the company’s website.

Third, in order for them to receive a written notice, you have to know who the shareholders are, not easy as we have said before.

All in all, many companies are therefore adopting a wider communications policy, letting all shareholders – and the markets generally – through (especially online) media that there is something new on the website to be seen. Good practice.


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