A. Explanation

This Provision describes the need for an effective investor relations policy for engaging and communicating with shareholders.

The company needs to convey relevant information to shareholders, particularly that which might impact its share price and value, through an effective investor relations policy and process.

The term “investor relations” generally refers to the formalised means by which companies communicate information, usually of a financial nature, to the investment community. Such communication is meant to help investors gain a full appreciation of the company’s business activities, strategy, and prospects and, consequently, allow the market to make an informed judgement about the fair value and appropriate ownership of a company.

Not only does an effective investor relations policy need to have such an objective, it should also be backed up by the appropriate resources and mechanisms by which it can be implemented. Usually, this requires companies to either have an investor relations department, or outsource the function to a specialist firm.

As there is an asymmetry of information between the directors and shareholders, it is important that the latter be kept informed on a timely basis about relevant matters, particularly those that could affect share price and value.

The principle of fairness applies in that all shareholders should be privy to the same information. There could be circumstances, such as at an investor roadshow, where companies may inadvertently disclose information to a select group of shareholders which could have a bearing on the price or value of the shares (MR Appendix 7.1 and CR Appendix 7A).

When this happens, a similar disclosure should be promptly made to all other shareholders. In this regard, it is common for companies to webcast their investor briefings, and/or to post the briefings and presentations on their website immediately after the event.

B. Practice Guidance

• Practice Guidance 12: Engagement with Shareholders.

C. Related Rules and Regulations

• MR Appendix 7.1 and CR Appendix 7A: Corporate Disclosure Policy.

D. CG Guides

• Board Guide 4.9: Investor Relations [Board Duties].
• Board Guide 7.2: Shareholders [Stakeholder Engagement].

E. Related Articles

• “Shareholder activism and how directors can respond” by Jerry Koh. (97KB)
• “Effective shareholders' communications” by Daniel or Lay Huat. (118KB)
• “Engagement with shareholders” by Mike Gray. (88KB)