Why Does My Investor Relations Manager Need to Be in This Meeting?
For public companies, whenever there is a
change in leadership for whatever reason, an issue that must be addressed is
whether the company needs to make a public filing disclosing the change. The
company should evaluate the disclosure both from a regulatory compliance
standpoint and an investor relations standpoint, carefully considering both the
tone and content of the disclosure.
When a company goes through the change in
leadership, the company will often be in crisis mode. When in crisis, the
thought process of who should be in the room to discuss the issues may not be
as clear as one would hope. When that happens, sometimes the investor relations
manager is left out of the mix. The investor relations manager can add
substantial value during tumultuous executive transitions by providing advice
regarding when and how the change should be communicated to shareholders.
The SEC rules regarding reporting of executive
changes require disclosure very quickly following the event, making it key to
involve both the general counsel and the investor relations manager from the
beginning to develop a sound and cohesive communication strategy. The investor
relations manager will likely ask questions regarding the timing and
circumstances of the transition to determine the best disclosure approach. Unfortunately
in many circumstances, the SEC rules regarding what needs to be reported
publicly and when can be confusing and counter intuitive. Training from
experienced outside counsel for the in-house team, including the investor
relations manager, on these reporting requirements is a really good idea. It is
best to have this training and to run some desktop drills related to them
before the crisis hits because what is clear is that a public company is
working on a very short timeframe when an obligation to report occurs.
With that timeframe in mind, it is best to have
a well-trained investor relations manager in the room when issues that may
cause the company to have an obligation to report are being discussed. This is
also important because a public company has an obligation to make sure that its
disclosures are accurate. Any disclosure that could be deemed as a
misrepresentation is a very fast way to find oneself in court with either the
SEC or shareholders. By making sure that the investor relations manager trained
on the disclosure rules and is fully aware of the facts, you have a much better
chance of avoiding that outcome.
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