Best practices for public companies: Using social media for disclosure
The social media landscape has become more vibrant than ever before as an increasing number of companies are using these channels to their advantage for building online credibility. Considered to be a social media leader among public companies, NovaGold Resources Inc. has used social media tools to spread its corporate brand and expand stakeholder reach, as described at a recent seminar — Social Media: Best Practices for Canadian Public Companies – that was put on by Fasken Martineau DuMoulin LLP, a leading international business law and litigation firm.
For NovaGold, it was a slow and measured start as the company built a business case for social media. They watched their peers, collected statistics and success stories, compiled the why’s and the how’s and then explained the benefits to management.
More importantly, NovaGold, a precious metals company located in Vancouver, laid the internal groundwork to ensure a solid foundation for social-media success. A comprehensive policy was drafted for legal review with a clear strategy that included a time management plan. Employees were educated and signed into the policy. Now, shareholders can access the company in their chosen medium and the company has more opportunities to push their information out quickly and frequently. NovaGold’s social media strategy has helped build their reputation for openness and accessibility.
While it is quick and easy to get started, you could easily step into a minefield of regulatory implications with a simple click, especially since every tweet and post is more or less permanent. There are no take-backs. While there is potential for misrepresentation due to character limits, being open to social media also means being open to risks, which should be addressed in advance in order to avoid them. A few things to consider as you consider social media for your own company:
- Mandated disclosure is also subject to disclosure law in social media. Material changes must be generally disclosed so issue a press release on the wire before disclosing on other channels.
- A practical way to protect the company using forward-looking information and technical information is to link back to Safe Harbor for each posting since each stands alone when found on search engines.
- Act with care if you are using third-party information such as analyst reports, endorsements and news sharing. If you are pulling third-party information onto your website, ensure copyright approval and that the information is current and balanced.
- Analyst reports cannot be selectively posted. Post all positive and negative reports and articles, not just the best ones.
- Prepare a corporate social media policy and plan. And be sure to consult with your legal team.
It is worthwhile for public companies to take advantage of the opportunities provided by social media tools to help build their online credibility and expand shareholder reach. But do your homework before participating.
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