Companies and their legal advisers have urged the Australian Securities Exchange to limit the social media outlets they need to monitor for stories and rumours as part of its overhaul of market disclosure requirements.
BHP Billiton, the Chartered Secretaries Association and law firm Herbert Smith Freehills have all warned the ASX that the proliferation of blogs and social media sites could make it expensive and impractical for companies to monitor them all.
BHP Billiton company secretary Jane McAloon said the proposed requirement for companies to monitor investor blogs, chat sites and other social media in circumstances such as the lead-up to a company announcement was "not practical", especially for larger companies that may attract a lot of commentary on websites around the world.
"We would suggest that the requirement should be limited to monitoring credible media and analyst coverage," BHP said in its submission.
The CSA said that with opportunities for rumour-mongering expanding with the rise of social media, the ASX should put more emphasis on the "credibility of sources".
"Blogs and chat sites spring up constantly," the peak body for company compliance officers said. "It is practically impossible for an entity to have knowledge of or monitor all social media sites regularly that include postings about the entity.
"Moreover, there are substantial cost implications."
CSA believed that the penalties should attach to those creating the rumours rather than put all of the responsibility on the public company.
The ASX has published a draft guidance note updating the circumstances in which companies must make disclosures to the market and encouraging them to make greater use of trading halts in circumstances where there may be a disorderly or misinformed market for their shares.
While companies have broadly welcomed the revisions, they have responded cautiously to suggestions that they should be forced to immediately disclose an approach by a rival bidder during a takeover where the proposal is incomplete or conditional. Such a "hair trigger" requirement could discourage white knight bidders and strengthen the hand of the first bidder, the Australian Institute of Company Directors said.
Companies have also warned that creating too broad a disclosure obligation could encourage rumour-mongering.
Herbert Smith Freehills said companies should not be forced to respond to false rumours and called for the ASX to set out "which types of sources and information a company is not required to monitor".
"One concern is that this policy may encourage journalists to invent or circulate rumours without regard to fact, which would force the company to publicly rebuff these market rumours," the firm said.
Fellow law firm Coors Chambers Westgarth said that the increasingly fragmented and varied media rumours could be difficult to identify and monitor.
It added that "it is difficult for boards to determine the likely impact of rumours broadcast through new media as it may be difficult to determine the number of . . . people with access to that media and whether (they) will attach credibility to it".
