Corporate Reporting through Social Media

Social media is increasingly being used for communicating financial and business information of interest to investors. But the use of social media raises several issues about the fairness, accuracy and relevance of the information as well as its conformity with regulatory and statutory requirements.

On March 9, the Canadian Securities Administrators released a press release announcing a new report titled CSA Staff Notice 51-348 Staff’s Review of Social Media Used by Reporting Issuers.

The report pointed to a number of issues that should be of interest to all companies using social media for Investor Relations purposes. and perhaps those not doing so.

A leading issue was the adoption by companies of a social media governance policy. "The review found that a significant number of issuers, or 77 per cent, had not developed a specific governance policy to direct their disclosure practices on social media websites." The report encourages companies to adopt such a policy.

Other issues identified in the report include:

1. Disclosure of forward looking information and whether the required rules for disclosure of such information are being followed.
2. Selective disclosure, i.e including in social media only the good news and not the bad. 
3. Misleading or incomplete disclosure and disclosure that is inconsistent with the financial statements or other formal documents.

These and other issues make for a document that is important for all public companies.

A copy of the staff report is available on the sites of Provincial Commissions. The copy made available by the OSC is here.