Interaction of social media with disclosure obligations under the AIM Rules
On 12 December 2016, AIM Regulation published its latest "Inside AIM" update, regarding the interaction of social media and a company's disclosure obligations under the AIM Rules for Companies (the AIM Rules).
Social media may encompass a wide range of electronic communications, such as Twitter, Facebook, LinkedIn, non-regulatory news feeds and internet forums and a company's own website.
No substitute for an RIS
The update makes it clear that these forms of communication are subject to the same rules regarding disclosure of information as the more traditional methods. It points out that disclosure by social media is not sufficient and will not meet a company's disclosure obligations under the AIM Rules. Companies which are admitted to trading on AIM should therefore continue to make announcements via a regulatory information service (RIS).
AIM Rules 10 and 11 and conflicting statements
AIM Rules 10 (Principles of disclosure) and 11 (General disclosure of price sensitive information) are important in ensuring that there is equal, fair and timely disclosure of regulatory information to the market. If statements made via social media breach AIM Rules 10 and/or 11 (for example, if there has been only premature, partial or selective disclosure), then AIM Regulation may investigate and take disciplinary action. Similarly, premature or selective disclosure via social media may also mean that the Financial Conduct Authority could take action if there has been a corresponding breach of the Market Abuse Regulation.
Where statements have been made via social media which are inconsistent with statements made via an RIS, AIM Regulation may request that the company issues a statement via an RIS clarifying the position.
AIM Rule 31 – sufficient procedures, resources and controls
AIM Rule 31 requires that a company traded on AIM must have in place sufficient procedures, resources and controls in order to enable it to comply with the AIM Rules. AIM Regulation states that these procedures, resources and controls should also take into account the use of social media and other forms of communication. AIM Regulation therefore suggests that AIM companies should consider the following:
- 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?
- In the context of an AIM company’s obligations under AIM Rules 10 and 31, what are its protocols in talking to its nominated adviser in advance of the release of information via social media?
Companies together with their nominated advisers should also consider how they will keep their nominated adviser informed of the company's social media updates, which may be important for a nominated adviser in considering whether a false market is developing in the company's securities.