'No one told us' is no excuse for the C-Suite
Recent amendments to ASX Guidelines have introduced obligations on 'C-Suite' executives, and other senior executives, to monitor social media. This article provides a summary of the changing obligations on companies in the social media space and how these changes impact on C-Suites and other executives.
Emergence of Social Media and Compliance with Brand Protection
When social media first began to consume the internet, it was arguable that C-Suites and other executives had a choice regarding whether or not to engage in, and monitor, their companies’ social media presence for the protection of their brand and reputation.
A recent Court decision in a case against the company Allergy Pathways has held that a company’s social media pages are considered advertising. The decision is discussed further in a recent article we posted, entitled “Customer Testimonials Under Scrutiny”
The Court's decision has put companies on notice that they must monitor their social media pages to ensure that they are accurate and correct at all times. This specifically relates to companies ensuring that customer testimonials, and posts by customers or other companies placed on their social pages are not misleading and deceptive.
New Obligations on C-Suites
On 1 May 2013, the ASX released the final Guidance Note 8 of the Listing Rules, which puts C-Suites and other executives of listed companies on notice that they must now have a social media compliance strategy to comply with this Guidance Note.
Interestingly, in this Guidance Note the ASX has taken social media compliance to a new level that is beyond marketing compliance of social media and beyond the company’s own social media pages. The Guidance Note applies to social media that includes any investor blogs, chat-sites or other social media that the company is aware of that regularly posts comments about the company.
With respect to social media, the Guidance Note states that companies must monitor social media sites and activities for:
- any leaks in announcements
- any signs that indicate that information about a transaction may no longer be confidential
- any comments that speculate on a particular matter involving a listed entity (e.g. that is about to enter into a material transaction or that is in material financial difficulties).
If any of these are identified by a company, it must notify ASX immediately and it must take action in accordance with the Guidance Note to ensure compliance with the ASX Listing Rules. Depending on the nature of the statements made on social media, such action may include:
- stopping any comments about speculations
- correcting any misleading and deceptive statements being made about the company; and
- discussing with ASX whether it is appropriate to request a trading halt.
What does this mean?
The current saturation of social media on the internet means that companies now need to determine to what extent they will participate in social media, as it is no longer the case that it can be ignored.
The effect of recent decisions and guidelines from various regulatory bodies means that:
- at a preliminary level, education is needed around social media and its impact on the company at all levels including the board, executive, management and employee
- social media sites not only need to be reviewed from a marketing and sales perspective in protecting the company’s brand, but also from a corporate governance compliance perspective
- social media needs to become part of the company’s strategy so that C-Suites and other executives are aware of:
- the decisions made about social media internally; and
- the content that is being published by the company, or by others about the company, on social media so that calculated decisions can be made
- a social media strategy needs to be a tactical plan that is updated regularly. Such strategy should have feedback from:
- public relations
- human resources
If you have questions about social media compliance programs or policies, the team at Coleman Greig can assist you. Our team of experienced lawyers also run social media seminars and workshops on preparing a social media compliance program and social media audits for your company. A social media seminar on corporate governance is scheduled on 25 July 2013. Please click here for more details: http://www.colemangreig.com.au/Event-132-Beyond_a_Social_Media_Policy.aspx
If you need any further assistance, please contact our experienced lawyers (02) 9895 9200.