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Wednesday, May 31, 2017

On March 9, 2017, the Canadian Securities Administrators (“CSA”) released CSA Staff Notice 51-348 Staff’s Review of Social Media Used by Reporting Issuers (the “Staff Notice”) outlining concerns and providing guidance on the uses of social media by reporting issuers.

A review was conducted by securities regulatory authorities in Alberta, Ontario and Québec regarding reporting issuers’ corporate disclosure on social media. The review investigated how reporting issuers used social media to engage with shareholders and other stakeholders. 111 reporting issuers from across Canada listed on the Toronto Stock Exchange, the TSX Venture Exchange and the Canadian Securities Exchange were surveyed. The reporting issuers reviewed varied in size and across industries. The CSA defined social media to include platforms such as Facebook, Instagram, Twitter, YouTube, GooglePlus and LinkedIn as well as reporting issuers’ websites and blogs.

Key findings and outcomes of the review include the following:

  • 72% of the reporting issuers who were reviewed were actively using at least one social media platform.
  • 30% of the reporting issuers reviewed raised securities law concerns and subsequently took action to change their social media activity after discussions with the CSA.
  • 77% of the reporting issuers reviewed did not have formal social media governance policies and procedures in place.
  • Subsequent to the review, 25% of the reporting issuers reviewed published clarifying disclosure, removed previous disclosure or committed to improving disclosure disseminated via social media.   
  • There were several instances of deficient disclosure on social media which led to material movement in the stock prices of these reporting issuers that may have been harmful to investors.  

The CSA assessed whether reporting issuers publishing information via social media was consistent with the requirements of National Instrument 51-102 Continuous Disclosure Obligations and the principles of National Policy 51-201 Disclosure Standards (“NP 51-201”). The Staff Notice identified three key areas of concern regarding social media use by reporting issuers, specifically in regards to selective disclosure, unbalanced and misleading disclosure and lack of governance policies.

Selective or Early Disclosure of Material Information via Social Media 

Any material information disseminated through social media must also be “generally disclosed” in accordance with the principles outlined in NP 51-201. Information is considered to be generally disclosed if it has been disseminated in a way that effectively reaches the marketplace and provides investors with a reasonable amount of time to analyze the information. NP 51-201 provides that information is not considered generally disclosed if it is published on either social media or a reporting issuer’s website alone (although NP 51-201 does not refer specifically to social media disclosure). In order to ensure material information is “generally disclosed," reporting issuers should report material information by way of press release before disclosing the material information on social media. The CSA identified the following examples of selective disclosure:

  • Forward-looking information such as revenue, earnings per share, cash flow targets, and expected timing of future significant milestones either being posted only on social media or posted there prior to being posted on the System for Electronic Document Analysis and Retrieval (SEDAR). The concern with this type of selective disclosure is that only some, not all, investors received the information and were aware of it when making an investment decision. Reporting issuers should ensure there is coordination in the timing of social media disclosure and publicly disclosed announcements.
  • Forward-looking information being posted on social media without including the required disclosure of the material factors and assumptions supporting such forward-looking information as well as failing to update the forward-looking information when subsequent events occur that change it.
  • Commentary from third parties posted on social media containing material information about a reporting issuer prior to the reporting issuer publicly disclosing such material information.

Unbalanced or Misleading Disclosure on Social Media

NP 51-201 requires that disclosure by a reporting issuer be balanced and factual and include enough detail for investors to understand the significance of the information. While the CSA did not have any regulatory concerns arising from a reporting issuer’s social media disclosure solely focused on positive information, the CSA did note a number of instances where social media postings were, in the aggregate, sufficiently promotional or unbalanced that they raised concerns under securities law. The CSA flagged the following examples of untrue and unbalanced disclosure:

  • Disclosure posted on social media that was untrue, misleading or promotional to such an extent that it could have misled investors.
  • Financial information provided in social media posts that was inconsistent with or not contained in the reporting issuer’s continuous disclosure record. Specifically, the CSA noted misleading disclosure of non-GAAP financial measures on social media that was not previously disclosed in regulatory filings or in other public disclosure outside of social media.
  • Links to analyst reports, research or other articles provided on social media without disclosing the independence of the author or whether the author had received any compensation from the reporting issuer. The Staff Notice also states that a reporting issuer should disclose the names and/or the recommendations of all independent analysts who cover the reporting issuer, not just analyst reports that are favourable to the reporting issuer.
  • Endorsements of third party posts containing forward-looking information without updating the reporting issuer’s own disclosure on the subject. This included posting links to third-party news articles disclosing forward-looking events. 

Creation and Enforcement of a Social Media Governance Policy 

The Staff Notice states that improper disclosure on social media can have harmful effects, including regulatory, reputational and costs to cure deficiencies. The Staff Notice indicates that disclosure on social media will continue to be monitored due to the significant growth in this area. Reporting issuers that are found to not be in compliance with the guidance provided in the Staff Notice and other applicable securities regulations will be expected to take corrective action. 

In order to help ensure that integrity of the disclosure that reporting issuers provide on social media, the CSA recommend that reporting issuers have strong social media governance policies and disclosure practices in place that address at least the following items: (i) who is permitted to post information regarding the reporting issuer on social media; (ii) what types of social media sites can be used and which type of account (corporate or personal) can be used; (iii) what type of information is permitted to be posted on social media; (iv) whether approvals are required before posting information; (v) who is responsible for monitoring the reporting issuer’s social media accounts and posts by third parties about the reporting issuer; and (vi) any other applicable guidelines and best practices to be followed.  


Reporting issuers who choose to use social media to communicate with investors must ensure that their social media posts are compliant with relevant securities law requirements, including the CSA’s disclosure expectations set out in the Staff Notice, and should have specific social media governance policies, procedures and controls in place to assist them in meeting those requirements.

 If you have any questions with respect to the matters discussed above, please contact Al Wiens ( 

This update is intended as a summary only and should not be regarded or relied upon as advice to any specific client or regarding any specific situation.


Al Wiens