Social media now plays a substantial role in the modern business world and companies have been quick to enhance their use of the various social media platforms now available in attempts to reach a much wider consumer base.

It is an efficient and affordable form of marketing, giving a company the ability to communicate with its stakeholders in a fresh and forward thinking way.

However, companies must tread carefully when utilising social media to enhance their online presence and its use must be carefully monitored. Even personal use by individuals connected with the company can impact dramatically on consumer perception of the company. Ensuring employees maintain a professional online persona is paramount to a modern company.

Effective monitoring of social media is a key consideration for any company that is aiming to preserve its positive public image. However, the consequences of inadequate social media procedures for AIM companies in the UK are even graver.

Regulatory requirements

The AIM team at the London Stock Exchange has issued guidance which outlines the importance of considering the interaction of social media with a company’s disclosure requirements under the AIM Rules for Companies. The guidance suggested that the increase in the use of social media to post instantaneous updates, following an event having taken place within the company, could lead to a breach of these governing rules.

Under the AIM Rules, a company is required to disclose information about, amongst other things:

  • its financial condition;
  • its sphere of activity;
  • the performance of its business; and
  • its expectation of its performance.

Any information which must be disclosed under the AIM Rules must be notified by the AIM company no later than it is published elsewhere. This notification must be made to a Regulatory Information Service provider (RIS).

If a company makes use of social media to make an announcement required under the AIM Rules, the social media post will not be deemed a substitute to making the same announcement to an RIS.

Potential consequences

There are numerous issues that could arise following an announcement via social media, or any other media platform. If the announcement is made in advance of making the market aware, and this leads to unusual behaviour of the company’s share price, trading in the company’s shares may be suspended until a formal announcement is made by the company. If an announcement is made (on social media) following an official announcement, but the social media content contradicts the preceding statement, a clarification of the circumstances may be necessary.

A company will also find it difficult to release information to the media on an embargoed basis, as this is treated as being published on the date it is released, not the date of actual publication.

If information is intentionally released to the media which is intended to alter the company’s share price, this is likely to constitute market abuse and the company would face action by the FCA which has strong powers to penalise the company involved.

The role of the nomad

Every company that is trading on AIM is required to appoint and retain a nominated advisor (or ‘nomad’) at all times. The nomad has various responsibilities which centre around ensuring the company is complying with the AIM Rules and is conditioned in the right way for the market.

The AIM Rules require companies to have in place sufficient procedures, resources and controls to enable it to comply with the rules. The guidance from the AIM team suggests that a company should constantly work and liaise with its nomad to ensure that any information that is passed on is done so in the correct way and in conjunction with the disclosure rules. These discussions could lead to the nomad considering it necessary to implement a form of press monitoring to ensure that no information is leaked from outside of the company that is likely to affect the company’s share price. If the leak is discovered quickly, it will also allow the company to issue any required clarification statement.

In order to ensure compliance with the AIM Rules, all AIM companies should either update an existing communications policy to cover the potential risks of social media usage, or introduce a new social media policy that covers the situations in which a trading company may find itself.

In summary…

It is of vital importance that a trading company monitors the use of social media throughout the organisation, including both business and personal channels.

The company must bear in mind the potential, unwanted problems that could arise as a result of announcing significant changes or transactions on social media, before making an RIS aware.

AIM is keen to maintain its reputation as a safe, stable and fair means of trading shares and so a company should ensure any significant statements are made through official channels before making stakeholders aware via social media. This will prevent any substantial changes in the company’s share price and the potential adverse consequences and penalties that could be imposed on the company as a result.

This blog post was written by Elliot Gibson. For further information, please contact:

Sophie Brookes, partner, Corporate

T: 0161 836 7823

E: Sophie.Brookes@gateleyplc.com


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This blog is intended only as a synopsis of certain recent developments. If any matter referred to in this blog is sought to be relied upon, further advice should be obtained.