What is a close period

Under the rules of being listed on the major stock exchange such as the FTSE, companies are duty bound to produce information and reports, that is there for shareholders to enable them to understand how the business is performing, the risks that the business faces and so on.

This is so that the shareholder can make an informed decision about their investment, find out more about the financial health of the company, and ultimately therefore choose whether they wish to continue their investment in their company, reduce it, remove it all, or perhaps even increase it: or simply maintain the status quo.

Typically companies will do two returns, these are the full year and half year results, the latter usually called the interim results. Some companies, often larger ones, may do quarterly reports also, though usually less formal reports may be issued as some sort of quarterly update rather. And of course periodically through the year companies will also release trading updates.

Now, the close period or closed period, refers to a period of time when certain directors or perhaps senior managers are not allowed to trade in the shares of the company. Typically this will be anyone with a major influence on the company or an area of it, or anyone who would gain unfair advantage by access to the knowledge of what the results are going to say.

This period usually lasts around two months - 60 days - and is in the run up to the release of the full results or the interim results. The people who this applies to will be told by the company. With a very large company it may well apply to some but not all directors: since there may be directors of small teams that sit under a few levels of directors for instance. In other companies, senior managers as well as directors will have the close period applied to them: it really does depend on the situation and company.

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