INSIDE AIM: Interaction of social media with disclosure obligations

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Summary: AIM Regulation have published Inside AIM reminding AIM companies that the use of ‘twitter’, non-regulatory news feeds and the company’s website is no substitute for making a notification under the AIM Rules no later than it is disclosed elsewhere. In addition, companies are reminded that the nomad has a key role to play in working with AIM companies to manage social media.

Requirement for notification to a RIS “no later than it is published elsewhere”

To satisfy their obligations under AIM Rules 10 and 11 (to ensure equal, fair and timely disclosure of regulatory information to the market and to maintain market integrity), companies which disclose information by social media alone will not satisfy these requirements.  The traditional means of dissemination through an RIS continues to take precedence.

Failure to comply with these rules could result in a suspension of the company's shares pending a compliant notification where there has been unusual share price movement because of an inequality of information in the market and/or the issue of a clarification notification ie. where comments made via social media by directors, or persons on behalf of an AIM company, are inconsistent with notifications made via a RIS. London Stock Exchange may also investigate and take disciplinary action if it thinks a company has breached these rules.

Systems, procedures and controls

A company’s systems, procedures and controls should take into account the use of social media and other forms of electronic communication in order to manage its disclosure obligations.  Communication policies should be carefully considered and issues companies may wish to consider include:

  • does the AIM company have a clear policy on the use of social media as part of its existing communications policies;
  • how effective is that policy in practice, for example, how does the AIM company ensure that the policy is  read and understood by all relevant persons;
  • how regularly is the policy reviewed and how does the AIM company identify and ensure the policy is updated when necessary;
  • if an AIM company engages third parties to disseminate regulatory information on its behalf, including via social media, how has it satisfied itself that the third party will not compromise compliance with the AIM Rules; and
  • in the context of an AIM company’s obligations under AIM Rules 10 and 31, what are its protocols in talking to its nomad in advance of the release of information via social media.

Companies and nomads will need to consider how they are kept informed about social media posts, in the same way as they would in relation to internet bulletin boards, so that they are aware of potential disclosure issues such as leaks of confidential information or whether a false market might be developing in the company's securities.  Such companies, through their nomads, will also need to continue to make London Stock Exchange aware of significant rumours or problems relating to internet discussions, which may impact on the orderly market in the securities.

Inside AIM

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