What is the close period?

The close time is a time that runs between the final preparation of the company's balance sheet and sharing this data with the general public. While the length of this period may vary, many businesses are waiting two months after the balance sheet and a formal announcement of the results. During this time framework, many companies impose limitations on the business activities of directors and other initiated persons associated with the company.

There are a number of reasons why the use of a close period is beneficial for business practice. The most visible is that by delaying the announcement of the company's finance for the recently completed year or quarter, it is possible to explore the reasons for these results. In the event of a decrease in profits from the previous year, it is time to find out why this loss occurred and be prepared to announce changes in operations or politicians to help reverse the loss. Would have tsserties experiencing a increase in profits, it is time to identify the main causes of higher profits and also develop the action plan that will use this growth.

During the close period, the company often decides to limit any type of announcement that is to do with the price of produced goods or services. Although it is often not a request in terms of any type of government regulations, it is often considered a wise practice that helps maintain the current status quo. For investors, the Company may decide to issue a commercial statement just before the beginning of the close period as a means of providing the most up -to -date information available.

As soon as the close period began, no one with the company's internal knowledge should buy or sell shares of the company's shares. Because initiates have access to information that has not yet been available to Made to the general public, the use of this knowledge to create trades would create an unfair advantage. In countries where the trading of dedicated illegal is also minimizing the potential of criminalsThe accusation and unfavorable publicity for corporation.

Usually, the company will publish small and no financial information over the near times. Exceptions sometimes occur, usually because of circumstances that are unusual and could not be predicted to the director. For example, if a natural disaster occurs and has a direct impact on the financial stability of the company, it may be necessary to decide to publish at least some financial information to maintain consumers 'confidence, as well as investors' concerns.