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Why Does My Investor Relations Manager Need to Be in This Meeting?

People in a 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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This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.