07.14.2006
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Updates
In recognition of the central role of the Internet in today's global economy, many companies rely on their corporate websites as basic information sources and marketing tools for business partners, customers and the general public. In light of increased attention to corporate governance matters and recent SEC and stock exchange corporate governance requirements, public companies typically create within their corporate websites a separate page devoted to investor relations, and many companies also create separate pages devoted exclusively to corporate governance matters, such as information about the board of directors and committees.
This Update summarizes SEC, NYSE and Nasdaq rules relating to website posting of SEC filings, corporate governance materials and other items and provides practical advice.
SEC Reports and Information
SEC rules and regulations require website posting of periodic and current reports filed with the SEC, Section 16 reports, Regulation G disclosures and other information.
SEC Periodic Reports on Forms 10-K and 10-Q and Current Reports on Form 8-K. The SEC requires "accelerated filers" and "large accelerated filers" to post their annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, and amendments to these reports, on their corporate websites and to make them available free of charge to the public (or explain in their annual reports why they do not do so). Website postings of these periodic and current reports must be made as soon as reasonably practicable after the reports are filed with or furnished to the SEC. Each accelerated and large accelerated filer must also disclose its website address in its annual report on Form 10‑K.
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Accelerated filers are U.S. reporting companies with a public float of at least $75 million but less than $700 million that have been subject to the reporting requirements under the Securities Exchange Act of 1934 for at least 12 months and have filed at least one annual report under the Exchange Act.
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Large accelerated filers have similar minimal characteristics as accelerated filers, but have a public float of at least $700 million.
Companies may provide access to these SEC reports by posting a hyperlink to the EDGAR database on the SEC's website or to third-party service providers that post these reports if public access is free of charge and readily available in a timely manner. The website posting should include access to all related exhibits and schedules filed with the SEC. The SEC encourages, but does not require, companies to also post information incorporated by reference in these reports and recommends that these reports remain posted for at least 12 months.
Section 16 "Insider" Reports -- Forms 3, 4 and 5. SEC regulations adopted under the Sarbanes-Oxley Act of 2002 require public companies that maintain corporate websites to post on their corporate websites beneficial ownership reports filed by company officers, directors and more than 10% beneficial owners on Forms 3, 4 and 5, including all exhibits and attachments. Companies must post these Section 16 reports on their websites by the end of the business day after the date the report is filed with the SEC. Companies may satisfy the requirement by posting these reports directly on their websites or by posting a hyperlink to a website of a third-party service provider (which would include the EDGAR database on the SEC's website). Regardless of the method of access, each report must remain posted for at least 12 months.
If a company decides to post a hyperlink to its Section 16 reports (rather than posting the reports separately on its website), the company must post a separate, direct link to the Section 16 filings only — not a link to all the company's SEC filings or to the home page or general search page of the third-party service provider. If a company wants to satisfy this requirement by posting a hyperlink to a third-party service provider, it must also meet the following additional conditions:
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the forms are made available in the appropriate time frame;
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access to the reports is free of charge to the user;
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the display format allows retrieval of all information in the forms;
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the medium to access the forms is not so burdensome that the intended users cannot effectively access the information provided;
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the access includes any exhibits or attachments; and
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access to the forms is through the website address the company normally uses for disseminating information to investors.
Regulation G Compliance. SEC Regulation G requires public disclosure of material information that includes a non-GAAP financial measure to be accompanied by a presentation of, and reconciliation to, the most directly comparable GAAP financial measure. If a company releases the non-GAAP financial measure orally, telephonically or by webcast, broadcast or other similar means (as opposed to in writing), it may provide the Regulation G information and reconciliation by:
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posting the information on the company's website; and
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disclosing the location and availability of that information during the presentation.
The SEC recommends that any non-GAAP financial information posted on a company's website remain posted for at least 12 months.
Earnings Information for Completed Fiscal Periods. Item 2.02 of Form 8-K requires companies that issue earnings releases or publicly disclose other material nonpublic information about their results of operations or financial condition for any completed annual or quarterly period to furnish this information by filing with the SEC a current report on Form 8-K within four business days after the date of the public disclosure. Item 2.02 includes a "safe harbor" exemption for oral, telephonic, webcast or similar communications — typically an earnings call — to proceed promptly after the company files the Form 8-K with the earnings release and does not require the company to disclose any further information (such as a transcript of the call) on a subsequent Form 8-K, even if the company discloses additional material nonpublic information about the completed earnings period. The safe harbor is available if:
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the communication complements, and occurs within 48 hours after, the related written communication previously furnished on Form 8-K;
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the company pre-announces the earnings call by a widely disseminated press release, and makes the earnings call broadly accessible to the public by dial-in conference call, webcast, broadcast or similar means; and
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the company posts on its website the previously undisclosed material financial and statistical information contained in the presentation (and any additional information required under Regulation G). A company may satisfy this website posting requirement by:
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providing through the company's website public access to an audio file that contains all the material financial and statistical information not disclosed prior to the presentation; or
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posting on the website, before the time of the presentation, slides or a presentation that contains the information.
The SEC encourages companies to provide access to these website postings for at least 12 months. If the company unexpectedly discloses material nonpublic information during the call (in response to a question-and-answer session, for example), the company must also promptly post this additional information on the company's website to comply with Regulation FD.
Regulation FD Compliance. SEC Regulation FD (fair disclosure) prohibits a public company from selectively disclosing material, nonpublic information to market professionals, such as broker-dealers and analysts, or to its investors if it is reasonably foreseeable that the recipients of the disclosure will trade based on the information. The company must broadly disclose material information by filing it with the SEC (for example, on Form 8-K) or through other prescribed methods, such as a press release, that will provide broad, non-exclusionary distribution of the information to the public. A company may use its website as part of the broad disclosure process, although just posting the information on its website is likely insufficient.
Corporate Governance Materials and Information
SEC rules and regulations and NYSE and Nasdaq corporate governance rules permit and sometimes require public companies to post corporate governance materials and information, including things like board committee charters and corporate codes and policies, on their corporate websites.
Director Nomination and Shareholder/Board Communication Information. SEC Exchange Act Regulation 14A requires public companies to include in their proxy statements disclosure about their nominating committees and the procedures by which shareholders may communicate with company directors.
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Nominating Committee Charter. If the company's nominating committee has a charter, the company must either:
- Post on Website — post a current copy of the charter on the company's website and indicate in its proxy statement that the charter is available on the website and the website address; or
- File With Proxy Statement — include the charter as an appendix to its proxy statement at least once every three years.
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Shareholder/Board Communication Policy and Procedures. The company must either post on its website or include in its proxy statement (and indicate in the proxy statement that the information is so posted and its website address) information about the company's shareholder/board communication policy and procedures, including:
- how shareholders may communicate with board members;
- how the company determines which communications will be forwarded to board members (this disclosure is not required if a majority of the company's independent directors have approved the procedures); and
- the company's policy about director attendance at annual meetings and the number of directors who attended the prior year's annual meeting.
SEC Code of Ethics Disclosure. Item 406 of SEC Regulation S-K requires a company to disclose in its annual report filed with the SEC whether it has adopted a Code of Ethics for its principal executive officer, principal financial officer and principal accounting officer or controller (or persons performing similar roles) and, if it has adopted a Code of Ethics, to make it publicly available by:
- filing a copy of the Code of Ethics as an exhibit to the company's annual report on Form 10-K;
- indicating in the annual report that the company will provide a copy of the Code of Ethics free of charge to any requesting person and providing instructions on how to make a request; or
- posting a copy of the Code of Ethics on the company's website and indicating that fact and the company's website address in the company's annual report on Form 10-K.
Companies may include a Code of Ethics for the listed officers in a more general employee code of conduct or ethics, in which case companies need only disclose publicly the SEC-required portions of that document.
The SEC requires public companies to publicly disclose amendments or waivers of the Code of Ethics that apply to the listed officers by either:
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posting the information on the company's website within four business days after the amendment or waiver, if the company has disclosed in its most recent annual report its website address and its intention to use this method for disclosing amendments or waivers; or
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disclosing the information in a current report on Form 8-K filed with the SEC.
Any amendment or waiver disclosed on the website must remain posted for at least 12 months.
New York Stock Exchange Corporate Governance Rules. NYSE corporate governance rules require listed companies to adopt and post on their websites:
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charters for the "most important" committees of the board of directors, including the audit, compensation and nominating/corporate governance committees;
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Corporate Governance Guidelines; and
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A Code of Business Conduct and Ethics for directors, officers and employees.
The content of these items must conform to the NYSE rules. The company's annual report on Form 10-K filed with the SEC must state that these items are accessible on the company's website and also available free of charge in print to any requesting shareholder. The disclosure relating to a company's Code of Business Conduct and Ethics should also be included in the company’s annual proxy statement if it files one.
NYSE rules also require public disclosure of amendments and waivers of a company's Code of Business Conduct and Ethics as it relates to any director or executive officer.
The NYSE has proposed changes to its corporate governance rules, some of which relate to website matters. If approved, the new rules would:
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require listed companies to maintain a corporate website; and
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no longer require listed companies to disclose in their proxy statements that corporate governance documents are available on their websites.
Nasdaq Corporate Governance Rules. Nasdaq likewise requires listed companies to adopt and publicly disclose:
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charters for the audit and nominating committees; and
- a Code of Conduct for directors, officers and employees that also complies with the SEC Code of Ethics requirements.
A company can satisfy the Nasdaq public disclosure requirement by posting the charters and the Code of Conduct on its website and stating in its annual report filed with the SEC that the documents are available on the website and its website address. Like the NYSE, Nasdaq rules also require public disclosure of amendments and waivers of a company's Code of Conduct as it relates to any director or executive officer.
Whistleblower Procedures. SEC Rule 10A-3 adopted under the Sarbanes-Oxley Act of 2002 requires audit committees to establish "whistleblower" procedures for the receipt, retention and treatment of complaints received by the company, including from third parties, regarding accounting, internal accounting controls or auditing matters, and for the confidential, anonymous submission by employees of concerns about accounting or auditing matters. Although Rule 10A-3 does not expressly require public disclosure of the procedures, broad dissemination of at least the portions of the procedures that describe how to submit complaints seems implicit. A company's website and employee intranet are logical means for this dissemination.
Application to Foreign Private Issuers
SEC Requirements. Unless a foreign private issuer voluntarily elects to report under the SEC regime applicable to U.S. companies, it is not required to file Section 16 reports, current reports on Form 8-K or SEC-compliant proxy statements. Accordingly, most foreign private issuers are exempt from the SEC requirements discussed above relating to:
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website posting of Section 16 insider reports;
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furnishing earnings releases on Form 8-K; and
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proxy disclosure of director nomination and shareholder/board communication procedures.
In addition, foreign private issuers are not required to post on their websites their annual reports on Form 20‑F or, for certain Canadian companies, Form 40‑F. However, Forms 20-F and 40-F include provisions similar to those for domestic U.S. filers that require the adoption and public disclosure of a Code of Ethics and the public disclosure on a Form 6‑K filing or on the company's website of any amendment or waiver to the Code of Ethics in favor of senior officers.
In addition, certain foreign private issuers are exempt from the Regulation G public disclosure and reconciliation requirements for certain disclosures of non-GAAP financial measures.
NYSE Requirements. NYSE corporate governance rules allow foreign private issuers to follow home country practices rather than most, but not all, of the NYSE corporate governance standards if they disclose the significant ways in which their corporate governance standards differ from those required by the NYSE for U.S. companies, either in their annual report to shareholders or on their website (if they disclose in their annual report to shareholders that this information is included on their website and provide the website address). Proposed changes to these rules would require only website disclosure of this information.
Nasdaq Requirements. Nasdaq rules likewise provide that foreign private issuers may follow home country governance practices rather than corresponding Nasdaq requirements if they provide Nasdaq with a letter from outside counsel in their home country certifying that the issuer's practices are not prohibited by the laws of the home country.
Practical Tips Using Corporate Websites for Corporate Governance Purposes. Companies that want to adopt good practices relating to website postings of SEC filings and corporate governance materials may find the following suggestions useful.
Consider Posting Additional Useful Corporate Information. In addition to items required to be posted by SEC, NYSE or Nasdaq rules, consider posting additional materials on your corporate governance web page, such as:
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Additional Information
A version of this Update was published as "Keep Me Posted! Web Site Posting of SEC and Corporate Governance Materials" in 14 Corporate Governance Advisor (Aspen Publishers July/Aug. 2006). You can find a general discussion of related proposals and of other recent laws, regulations and rule proposals of interest to public companies on our website.