Close Period

DEFINITION of 'Close Period'

The time period between the completion of a listed company's financial results and the announcing of these results to the public. The close period is typically regarded as the one-month period preceding the release of a company's quarterly results, and the two-month period before the release of its annual results.

BREAKING DOWN 'Close Period'

The close period is intended to prevent trading in a company's shares by its insiders ahead of the public dissemination of its financial results. This is because the insiders may be privy to information that is not yet in the public domain, and may be tempted to "jump the gun" with regard to their company shareholdings.

For example, if a company has unexpectedly had a disastrous quarter, its shares may be expected to plunge once the financial results are released. A corporate insider who sells some or all of his or her shares in the company before the news is released to the general public would be subject to severe sanctions from the regulators, including disgorgement of profits if any, fines and even incarceration in extreme cases.