Corporate communications and the legal environment: the summary annual report and the shareholder communication rules

The US Federal Securities Laws extensively regulate disclosure by publicly traded companies. Overregulation has sometimes hindered management´s ability to develop effective and timely communications. The author discusses how two recent developments have returned some degree of flexibility and control over the communication process to management. In January 1986, the commission approved the use of the summary annual report. Unlike conventional glossy annual reports, summary reports are subject to substantially less regulation. Companies largely have a free hand to determine the contents of the reports, raising the prospect of shorter, more readable, and more effective documents. The Commission also adopted rules providing companies with access to lists of shareholders holding stock in street name and nominee accounts. With the information, companies can mail corporate communications directly to beneficial owners. Direct communications will permit more frequent communications at reduced costs