Web Site Compliance
By Paul Berkowitz and
Michele Keusch, Greenberg Traurig,
View or download the PDF version of this Alert
During the first year under The Sarbanes-Oxley Act, companies focused
on compliance with new corporate governance mandates. Now that the law has
entered its second year, companies must expand their focus to ensure that
all aspects of their business reflect the new requirements. One important
area for review is company Web sites. Since the world has become a “wired”
network of business and commerce, issuer Web sites should be viewed not
only as an important source of information for customers and investors,
but also a tool for compliance with a number of laws and regulations and
a potential source of liability for those that fail to comply with securities
laws in general and the Act specifically. This GT Alert is a compilation
of information to assist issuers in carrying out their review.
|"Since the world has become a
'wired' network of business and commerce, issuer Web sites should
be viewed not only as an important source of information for customers
and investors, but also a tool for compliance with a number of laws
and regulations and a potential source of liability."
We urge our clients to review their Web sites on a regular basis. Moreover,
whenever the issuance of securities is contemplated, a Web site review should
be one of the first tasks undertaken.
Forms 10-K, 10-Q, 8-K and related amendments of accelerated filers
- Forms 10-K, 10-Q, and 8-K must be posted on the issuer’s Web site
as soon as reasonably practicable after filing with the SEC. The
issuer must disclose the Web address at which these reports may be found
(or the issuer must explain in its Form 10-K why it does not post the
filings and whether electronic or paper copies of its filings will be
provided by the issuer upon request and free of charge).
- An accelerated filer is an issuer which has an aggregate market value
of equity held by non-affiliates of $75 million or more, has been subject
to Exchange Act reporting requirements for at least one year, has filed
at least one annual report and is not eligible to use Form 10-KSB.
- The Web address for posting these reports must be the Web site normally
used by the issuer for investor relations.
- “As soon as reasonably practicable,” means that reports and amendments
should be available, “barring unforeseen circumstances, on the same day
- Exhibits and supplemental schedules electronically filed with the
reports or amendments should be accessible through the Web site, but information
incorporated by reference is not required to be separately posted.
- Although there is no mandated period, SEC guidance suggests that reports
should remain available on the Web site for at least 12 months.
- Filings in electronic formats (such as PDF) are permitted as an on-line
alternative to posting filings in the official format used to transmit
the filings to the EDGAR system.
- As an alternative to providing direct access to all forms, hyperlinking
to reports via a third-party service, including the EDGAR database on
the Commission’s Web site, is allowed, subject to compliance with the
- The forms are available in the required time frame;
- Access is free of charge;
- All information in the forms is retrievable;
- The medium to access the forms is such that intended users can effectively
access the information, including any exhibits or attachments;
- Access to the forms is through the issuer’s Web site address normally
used by the issuer for disseminating information to investors; and
- Any hyperlink is directly to the issuer’s forms (or a list of the
forms) and not the home page or general search page of the third-party
Section 16 Forms
- Forms 3, 4 and 5 filed on or after June 30, 2003 with respect to the
securities of an issuer maintaining a corporate Web site must be posted
by the end of the business day after filing.
- Each of these forms is required to remain accessible on the issuer’s
Web site for at least 12 months from posting.
- Web site access may be provided through a hyperlink as long as the
requirements described above under “Forms 10-K, 10-Q 8-K and related amendments
of accelerated filers” are met and:
- The hyperlinks are directly to a Web site containing only the Section
16 forms filed with respect to the issuer’s securities, and not to a
site containing all Commission filings related to the issuer. In addition,
any hyperlink caption must clearly indicate that it leads to the Section
16 forms filed with respect to the issuer’s securities.
- Companies that do not use a hyperlink to a third party Web site to
post these filings must implement a policy of promptly receiving electronic
copies of the filings from the insiders who file them in a format that
can easily be posted on the Web site.
Required For NYSE-Listed Companies
The NYSE listing standards effective on the earlier of (i) the issuer’s
first annual meeting after January 15, 2004 or (ii) October 31, 2004, require
issuers to include on their corporate Web sites the following:
- Charters of the committees of the issuer’s board of directors, including
the audit, compensation and nominating/corporate governance committee,
or any committee performing equivalent functions.
- Corporate governance guidelines required to be adopted by the board
- Code of business conduct and ethics for directors, officers and employees.
If a separate code of ethics is adopted for finance personnel, issuers
should also post such code.
Nominating Committee Charter
- In proxy statements after January 1, 2004, an issuer must disclose
whether or not its board of directors has a nominating committee, and
if so, whether the nominating committee has adopted a charter.
- If the nominating committee has adopted a charter, the proxy statement
should disclose that the charter is available on the issuer’s Web site
and disclose the Web site address. Otherwise, the issuer must include
a copy of the nominating committee charter as an appendix to its proxy
statement at least once every three years. If the nominating committee
charter is not available on the issuer’s Web site, the issuer must identify
when the charter was included as an appendix to the proxy for any year
in which it is not appended.
- The adoption of a nominating committee charter and its posting on
the issuer’s Web site is required for NYSE-listed companies.
Code of Ethics
- Issuers must disclose, in their annual reports, whether the issuer
has adopted a code of ethics that applies to the issuer’s “principal executive
officer, principal financial officer, principal accounting officer or
controller, or persons performing similar functions.” Posting the code
of ethics on the issuer’s Web site is an alternative to filing the code
of ethics as an exhibit to its annual report or including a statement
in that report that the issuer will provide a free of charge copy upon
- Posting the code of ethics on the Web site is required for NYSE-listed
- Any amendments to, or waivers from, the code of ethics must be filed
on Form 8-K or posted on the issuer’s Web site within five business days
of the date of the amendment or waiver.
- To satisfy the requirement through posting the code of ethics and
any amendments or waivers on its Web site, an issuer must disclose its
Web site address and its intention to provide Web site disclosure in
its annual report.
- Information regarding amendments and waivers must be available on
the Web site for at least 12 months.
Webcasts of Earnings Calls
- As a means of complying with Regulation FD, many issuers give advance
notice of their quarterly earnings calls in a press release and allow
the public to participate through a webcast located on the issuer’s Web
site. A rebroadcast of the call is then available on the Web site for
several days or weeks following the call.
Regulation G Reconciliations
- Under Regulation G, if a non-GAAP financial measure is released orally,
telephonically, by webcast, by broadcast or other similar means, reconciliation
to the most directly comparable financial measure under GAAP must be provided.
This requirement may be satisfied by posting the information on the issuer’s
Web site and disclosing the location and availability of the information
during the presentation.
- Again, the SEC suggests that this information be available on the
Web site for at least 12 months.
Other SEC Filings
- While not required under current rules, the SEC encourages companies
to include other SEC filings (both under the Securities Act and the Exchange
Act) on their Web sites.
- These include proxy statements on Schedule 14A, information statements
on Schedule 14C, and registration statements on Forms S-1, S-2, S-3,
S-4 and S-8.
- Providing hyperlinks to exhibits contained in and incorporated by
reference into filings provided on the issuer’s Web site is another method
of providing investors user-friendly information.
- Many companies include press releases (for the past year or two) on
their investor relations site. Some companies also provide an archive
of earlier press releases. Once the decision is made to include press
releases on the Web site, releases with good news and those with bad news
must be equally accessible and available.
- Investors may also be provided the ability to register to receive
e-mail alerts when a press release (or an SEC filing or other information)
is posted on the Web site.
Corporate Governance Information
- Investors may look to the investor relations Web site of an issuer
for corporate governance information, including:
- Names and information about the directors and officers of the issuer,
which may include biographies and photos.
- Lists of board committees and their membership.
- Copies of any charters adopted by committees of the board.
- Copies of the certifications required by the Act.
- The issuer’s charter and by-laws (or equivalent documents).
- Summary table of recent insider transactions.
- Governance alerts (e-mails sent to subscribers whenever new information
appears on the governance section of the site).
- Summary of stock ownership by officers and directors (from the proxy
statement, with updates based on Section 16 filings).
- If the Web site gathers any information about visitors or subscribers
(i.e. to alerts or webcasts) the issuer should include a statement regarding
the issuer’s policy with respect to using, sharing and selling that information.
- Companies should consider providing a hyperlink to the privacy notice
on every page of the Web site.
What to Avoid
Incorporating Web site information into SEC filings
- While the SEC has taken the position that including a statement as
to the availability of the issuer’s filings on its Web site and providing
the Web site address will not by itself constitute incorporation by reference,
issuers must be careful not to take steps that will constitute incorporation
by reference of other information on the Web site.
- The SEC generally considers any information that may be accessed from
a hyperlink in a prospectus to be part of that prospectus. Companies should
make reasonable efforts to ensure that the Web site address provided does
not become an active link when posted on the Web site and should clearly
state the intention not to incorporate information from the Web site.
- Note that filings on Forms 10-K, 10-Q and 8-K may be incorporated
into and become part of a prospectus and the same precautions should
be taken with respect to these filings.
- Issuers should be careful with respect to information available through
a hyperlink on the company Web site. If the issuer participated in the
preparation of the information or implicitly or explicitly endorses or
approves the information, the information may be the basis for liability
under securities laws.
- Links to the phone numbers or Web sites of analysts who follow an
issuer’s stock or to specific analyst reports may be considered endorsed
and adopted by the issuer.
- Links to analyst reports should not be selective and should include
both positive and negative reports.
- If links to analyst reports or analyst contact information are provided,
a disclaimer to the effect that the issuer does not endorse the report
should be included.
Sites that are not current
- Web sites should include the date of the last update of a specific
page or section. Information on the site should be kept current and information
that is no longer accurate should be deleted (or at least clearly marked
to speak as of an earlier date).
© 2004 Greenberg Traurig
For more information, please review our Corporate & Securities Practice
description, or feel free to contact one of our attorneys.
This GT ALERT is issued for informational purposes only and is not intended
to be construed or used as general legal advice. Greenberg Traurig attorneys
provide practical, result-oriented strategies and solutions tailored to
meet our clients’ individual legal needs.