Public companies must monitor social media

Australian-listed life science companies are now obligated to have a process in place to monitor social media for premature disclosure of market-sensitive information.

The ASX recently updated its disclosure guidance to suggest companies should develop the ability to respond rapidly to premature disclosure through social channels.

Buchan Consulting is advising listed companies to be aware of the new guidelines and what they mean for the organisation’s reporting responsibilities.

The firm said that the guidelines suggest that ASX-listed firms monitor investor blogs, chat sites and other social media that the company knows regularly include postings about it.

This level of monitoring can be limited to the periods just before a market-sensitive announcement is sent out or in the lead-up to closing a market-sensitive transaction.

If companies encounter evidence that sensitive information has leaked to social media, they should immediately contact the ASX to determine whether a trading halt is required.

Likewise, companies should be monitoring whether a confidential transaction they are negotiating is no longer private, and have a letter requesting a trading halt drafted and ready to send if word of the deal gets out.

Buchan said it believes the updated guidelines herald a new era of reporting compliance, whereby companies will be required to better understand social media and online audiences.