New TSX Rules Will Make Your Website Bigger; Here’s How to Make It Better
The winds of change are blowing with respect to corporate websites. With few exceptions – and beginning on April 1, 2018 – the TSX will require listed company websites to include a number of additional disclosures.
These include:
- certificate and articles of the corporation (referred to as constating documents);
- corporate governance documents including board mandate, committee charters, position descriptions, and codes of conduct; and
- if adopted by an issuer, full text of security holder rights plans, majority voting, advance notice of director nominations, anti-corruption, environmental, social and whistleblower policies.
Known as Section 473 Part IV amendments to the TSX Company Manual, these new rules are designed, in the words of the exchange, “to provide participants in the Canadian capital markets with ready access to key security holder documents.” Only non-corporate issuers or eligible interlisted issuers are exempt.
When these amendments were first proposed, several organizations, including CIRI, expressed the view that since many of the disclosures are already made in other formats (Annual Information Forms, Management Information Circulars, etc.) or filed on SEDAR, requiring them to be posted on a company’s IR site would be duplicative and add compliance cost and complexity.
Not to be deterred, the TSX moved forward, arguing that these documents are difficult to find on SEDAR due to issuers' “differing practices” for filing materials “under consistent categories” and that some of the policy documents are not SEDAR applicable.
By adopting the amendments, the TSX furthered the goal of making investor websites a “complete repository of current and accurate investor relations information”, which is a laudable objective.
But just because websites are about to get larger and more ‘complete’ does not mean they will be inherently better. As proof, consider SEDAR’s website. So what will make your site better? In this issue of IR focus, we offer answers based, in part, on ideas provided by a select group of institutional investors with whom we discussed the topic. Given that most companies will need to update their sites this year to accommodate the TSX requirements, now is the perfect time to consider a broader website refreshment.
Bring Key Information to the Forefront
Institutional shareholders complain that websites are often out of date, too promotional and do not provide easy access to the key information they need, such as discussions of corporate strategy and addressable market (size and trends), and assessments of competitive strengths and threats. While they acknowledge that some of this information can be found in posted website documents (MD&A and investor presentations), they believe that websites should be designed to bring key shareholder information to the forefront instead of being buried under a sea of mouse clicks and PDF downloads.
Starting from an understanding of what information is most important to the audience may require some companies to rethink investor home page content and the presentation of that content. One way to do this is to adopt a dashboard approach. By dashboard, we mean headline driven icons that visually present various windows into content on subpages below.
Using a dashboard approach makes investor pages visually appealing, elevates the most important content to headline status and guides the viewer to information that is logically grouped/organized. What core dashboard headings make sense? Here is a checklist:
Strategies and opportunities. As noted above, investors value this information so creating a place for it on the website home page (with a link to explanatory text) is recommended, even though this means duplicating content found in the MD&A. This area of the website is also a logical place to include graphs and tables that show addressable market size and growth rates, as well as commentary on market trends.
Key performance indicators. Investors value financial data, either graphed or easily extracted for graphing purposes. A home page headline that links to a subpage with such information will significantly increase the value of the overall site. What sort of information should be graphed? Only an IRO can fully answer this question, as KPIs are unique to each industry and management team; however, revenues, earnings, cash flows, and efficiency measures plotted over time are obvious candidates for inclusion. Some companies eschew graphs because it takes time to create and update them and if there is a swoon in performance, they don’t want to draw attention to the situation. While these concerns are understandable, regulators have little sympathy for arguments about the cost of keeping website information updated. The TSX manual states that companies have a “duty to correct and update” websites and that out-of-date information may be considered misleading. Similarly, companies have a duty to present on their websites all information, not just favourable items or data. Institutional investors surveyed by IR focus suggested that more companies pay attention to these requirements when creating and managing their sites.
Investor overview. This dashboard heading serves as a portal to a page on the website that includes the core investor presentation slide deck. This subpage should include a preamble that highlights the company’s competitive strengths and points of difference. While this information is likely included in the investor deck PDF, don’t make readers search for it because, if they miss it, they won’t find answers to the question of why they should invest. It’s also a good idea to include the corporate profile on the investor overview subpage, if not on the investor home page itself. Corporate profiles are typically short and carefully crafted to summarize the strengths of the business and deserve a prominent website home, even though they are found at the bottom of every press release.
Corporate governance. This icon links to a page with items such as director and C-suite bios, Board committee mandates and Management Information Circulars, as well as the information required by the TSX under Section 473 Part IV. As with financial reports, governance disclosure documents should be catalogued in an easy-to-follow table, organized by year. Some companies are considering the addition of an investor tab called Important Policies to display TSX required documentation. Before publishing these important policies, companies should take an opportunity to conduct an internal verification that all the policies are current, suitable and actually followed, so that they are not caught out by advertising one standard of conduct, but actually following a different or lesser one.
Quarterly financial reports. This dashboard item links to a page with a table containing, by quarter, PDFs of earnings releases, reports to shareholders, supplemental information, earnings webcast slide decks, webcast transcriptions and fact sheets. Putting all of this information together in a single place, rather than in separate website sections, makes it faster and easier for investors to use.
Annual reports. This dashboard icon links to a page with current and archived annual reports. Separating annual reports from quarterly financial reports makes it easier for visitors to the site to find what they need and allows the quarterly financial reports section (noted above) to be more focused.
Latest news. This links to a subpage with current and archived news releases, but it may be possible to include in the dashboard icon the headlines of two or three most recent releases.
Share price performance. While institutional investors do not require a stock price display, retail investors often do. While including this feature increases the website budget, it is a worthwhile addition that cuts down on retail calls and visits to other websites. The share price should be displayed on all investor pages, not just the home page.
Investor contacts. Phone numbers and email addresses of key investor relations personnel belong with transfer agent contact information and should be displayed in a prominent place on the home page and on all subpages.
IR news release alerts. The ability to sign up to automatically receive emails is a service that most investor websites offer, but it is sometimes difficult for the first-time viewer to find the right spot to do so. Accordingly, put this option in a dashboard on the home page and repeat it on all underlying pages.
Presentations and events. This icon will lead viewers to a subpage that contains an archive of investor presentations (PDFs of slide decks and transcriptions). It should also include the registration page for upcoming quarterly webcast presentations and a list of scheduled future presentations.
Websites are visual entities and companies that recognize this typically produce better, shorter, punchier and more effective content. With technology making the cost of production low, it is also worthwhile to consider including videos that feature the CEO discussing the business model, strategy, recent performance, or all of these items.
Time to Consider
Is your website showing your company in the best way possible and is the presentation of key information as transparent and well organized as it could be? Hopefully this issue of IR focus and the new TSX website disclosure requirements will prompt IROs to consider these questions fully, making their companies’ websites not only bigger – but better.
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