In response to questions about the use of Twitter and certain other social media platforms under securities laws given the restrictions on the amount of information that can be conveyed, the SEC staff has provided guidance on the use of technology that limit the number of characters or amount of text when used in three types of communications:

  • Made in reliance under Rule 134 (communications not deemed a prospectus) to satisfy Rule 134(b) or Rule 134(d)
  • A legend under the exemption to satisfy Rule 165(c)(1) related to business combinations and also solicitations under Rule 14a-12 and pre-commencement written communications
  • A legend required by Rule 433(c)(2)(i) for free writing prospectuses

In these limited circumstances, the Staff has indicated that it will not object to the use of an active hyperlink to satisfy the various rule requirements if:

  • The electronic communication is distributed through a platform that has technological limitations on the number of characters or amount of text that may be included in the communication;
  • Including the required statements in their entirety, together with the other information, would cause the communication to exceed the limit on the number of characters or amount of text; and
  • The communication contains an active hyperlink to the required statements and prominently conveys, through introductory language or otherwise, that important or required information is provided through the hyperlink.

Namely, only when using technology that clearly restrict the ability to include all the statements required under the securities rules because of space limitations can hyperlinks be used to satisfy those rules, but the user must also indicate “prominently” that the hyperlink contains important or required information. It appears that the examples we have seen this season of tweets to support shareholder proposals would need to follow the guidance.

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