Corporate Disclosure and Websites

Corporate Disclosure and Websites

Welcome to Plaskacz and Associates’ ‘LEGAL SOLUTIONS TO SOFTWARE ISSUES’ newsletter. This is a free information service provided by the law firm of Plaskacz and Associates. IT IS DESIGNED TO PROVIDE INFORMATION OF A GENERAL NATURE ONLY AND IS NOT INTENDED TO REPLACE SPECIFIC LEGAL ADVICE. Q3 2002

Your corporate website can provide an opportunity for your company to disseminate investor relations information. There are, however, a number of issues that a company must consider when it chooses to publish this material on-line. Investor relations information posted on the web should be viewed as an extension of your formal corporate disclosure. As such, this type of communication is subject to securities laws and regulatory rules. Disseminating investor relations information on the web should not be viewed merely as a promotional tool.

Dissemination of information via the Internet is subject to the same laws as traditional forms of dissemination such as news releases. This means a company must ensure that information posted on its website is not misleading; information is misleading if it is out of date, incomplete, incorrect or omits a fact so as to make another statement misleading. This imposes a duty to review, correct and update all investor relations information on your website.

However, disclosure by the Internet alone will not meet a company’s disclosure requirements and a company must continue to use traditional means of dissemination. Not all investors have access to the Internet and even investors with access will be unaware that new information is available unless the company notifies them of an update. Recently though, the Toronto Stock Exchange strongly recommended that all listed companies maintain a corporate website to disclose investor relations information electronically as an appropriate and potent tool of investor relations.

It is imperative that a company clearly identify and separate its investment information from other information on its website. In particular, promotional, sales and marketing information should not be included on the same web pages as investor relations information. A company’s homepage should clearly distinguish sections containing investor relations information from sections containing other information.

Promotional materials related to a distribution of securities may contravene a variety of rules and regulations and should only be posted on a Web site if such materials are cleared by your lawyer first. Special regard should be made to foreign securities regulators who may take the view that posting offering documents on a Web site that can be accessed by someone in their jurisdiction constitutes an offering in that jurisdiction unless appropriate disclaimers are included on the document or other measures are taken to restrict access.

A company should not post any investor relations information on its website that is authored by an outside source, unless the information was prepared on behalf of the company, or is general in nature and not specific to your company. Your company may be seen to be endorsing the views and conclusions of any such information. This could also give rise to an obligation to correct the information if you become aware that the content is or has become misleading. Instead of posting outsider investor information, it may be desirable to provide a list of all analysts who follow the company together with contact information so that investors may contact them directly. The list should be complete and include all analysts that the company knows to follow it, regardless of their recommendations.

Corporate disclosure on your website will give rise to many legal issues. It is in the best interests of your company to consult with your legal advisors to discuss the accuracy, timeliness and completeness of all information posted on-line.