Staff will allow required cautionary legends to be provided via hyperlink.
On April 21, the Staff of the Securities and Exchange Commission’s (SEC’s) Division of Corporation Finance issued helpful guidance regarding the use of social media for certain written communications that are otherwise subject to SEC regulation.
In connection with registered securities offerings, business combinations, proxy solicitations, and tender offers, various SEC rules allow written communications beyond the registration statement, proxy statement, or other more formal documents. In certain cases, the rules restrict the permitted content of these communications and/or impose filing requirements. In each case, the rules require the inclusion of a cautionary legend, and the Staff’s social media guidance addresses this legend requirement. Restrictions on the information that can be included in the communications and the filing requirements are unaffected by the SEC’s guidance.
Recognizing the growing interest in using social media to communicate with security holders and others and recognizing that some electronic communication platforms—most notably, Twitter—limit the number of characters or amount of text that can be included in communications, the Staff’s guidance will allow companies to satisfy the legend requirement by using an active hyperlink.
Under the guidance, using a link is permitted if, and only if, the following requirements are met:
This guidance applies to each of the following types of permitted communications:
At the same time, the Staff issued guidance on the retransmission of communications properly made under Rule 134 or Rule 433 in connection with a registered securities offering. The Staff stated that, so long as the third party that retransmits the communication is neither an offering participant nor acting on behalf of the issuer of the securities or an offering participant and the issuer has no involvement in the third party’s retransmission beyond having initially prepared and distributed the communication in compliance with either Rule 134 or Rule 433, the retransmission would not be attributable to the issuer.
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