Mark Hynes - thoughts on corporate disclosure

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

Thursday, December 13, 2007

What’s this? Regulators relaxing rules about shareholder communications?

It was really refreshing this week to moderate a 2 day seminar with attendees from Poland, Russia, Georgia, Saudi Arabia. So often these seminars are focussed on regulation, a word that appears high up in any definition of IR.

The guys from eastern Europe wanted instead to home in on how to build a truly comprehensive understanding of the company among analysts and investors, not just on how to stay on the correct side of the law. We discussed building sell side coverage, using the media to good effect, communicating the value of intangibles, and all the original concepts of good IR before the creation of the rule books.

So it is encouraging this week to see a reversal of the regulatory trend. The SEC has announced that they will encourage online shareholder forums. The amendments to the federal proxy rules are expected to open up new avenues for real-time communications among shareholders, and between shareholders and the companies they own.

Chairman Cox commented that "The rule amendments are intended to remove legal concerns, such as the risk that discussion in an online forum might be viewed as a proxy solicitation, that might deter shareholders and companies from using this new technology."

These will create potentially very valuable means by which companies can communicate through blogs, chat rooms and other electronic media, allowing shareholders and other stakeholders to discuss issues such as director nominations, without fear of breaching proxy solicitation rules.

And given the exponential growth of blogging (did you know that there are 22 blogs in the top 100 most visited media sites on the web?), it cannot be long before blogging for IR becomes mainstream.

This is an excellent outcome to what had looked for a while an unpromising situation. The SEC’s vote last month to let companies deny shareholders access to annual proxy ballots, a move governance advocates say could make corporate America less responsive to investors, had been wrapped up with the ideas on shareholder forums.Now it has been broken out.

Another move back to what top IR professionals rightly regard as ‘real IR’ – rather than the focus on compliance.


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