Insider trading blackout now runs on the earnings calendar only

The trading blackout that once ran for five business days before and one business day after any material disclosure by a listed company is now limited to the earnings calendar, under amendments (pdf) made by the Financial Regulatory Authority (FRA) to the listing and delisting rules which took effect yesterday. M&As, capital increases, major contract awards, and regulatory actions no longer open a window on their own.

SOUND SMART- This narrows the blackout, not the insider-trading ban. The old rules (pdf) barred insiders, company officers, anyone with access to non-public information, and 20%-plus shareholders from dealing for five days before and a day after any material event or information, putting a buffer around every market-moving disclosure. That buffer is now tied to the earnings calendar instead. The underlying prohibition on trading on inside information sits separately under the Capital Market Law and remains untouched.

The mechanics of the rule: The window now runs five business days before and the business day after publication of a company’s results of operations and, in the text of the amendment, around its annual and periodic financial statements where those differ materially from the results already published.

Who counts as an insider? The bucket covers board members of the company, its holding company, and its subsidiary, sister, and controlled companies, along with their representatives, spouses, and minor children. It also includes anyone who can access the company’s inside information, as well as their spouses and minor children. In addition, the blackout catches company officers and any shareholder holding 20% or more, alone or through related parties.

What this means in practice: Results sat in a grey area under the old wording, “there used to be a bit of debate around it,” Sameh Gharib, capital markets expert at Tycoon Securities, tells EnterpriseAM, arguably not a discrete material event at all, since they’re period performance figures rather than a one-off occurrence, and there was genuine debate over whether the blackout caught them. Naming results explicitly removes that ambiguity, while broader inside information goes back to sitting under the Capital Market Law and its executive regulations, he said.

Gharib reads the package as a net positive. Fuller transparency and equal access to information for all shareholders rather than a select few is what separates developed markets from the rest, he tells us.

The rest of the package

Treasury and incentive shares are now outside the blackout entirely, provided dealing runs through the special transactions market or the open market — which lets insiders, officers, and 20%-plus shareholders trade treasury or incentive shares during the blackout, including taking delivery of incentive awards in the run-up to results. Treasury shares revert to the company, Gharib tells us, so a purchase before good results or a sale before bad ones accrues to the whole shareholder base rather than to particular individuals, which is the logic for pulling them out of the blackout.

One control disappeared: Companies had been barred from letting anyone see inside information before entering their details in the insider register. The register’s own catch-all wording is gone too, though the rulebook’s definition of insiders still reaches anyone who can access inside information — so the register’s population is largely unchanged in substance.

The FRA can take conflicted insiders out of deliberations + voting: Where a board or general assembly matter touches an insider, an officer, or a 20%-plus shareholder’s direct or indirect interest, or hands them a benefit, advantage, preferential treatment, or relief from an obligation, the FRA may limit deliberation and voting on it to the company’s other shareholders. It also reaches those people who are under investigation for crimes involving company funds.

What changed: Conflicted voting was already barred automatically at 10%, both on related-party exchange contracts and on any other matter where an insider had an interest, with the board report to the general assembly having to show they’d disclosed it and stayed out of the vote. Those bars stand. What’s new sits on top of them, and only bites at 20% and up — and only when the FRA decides to use it.

Conflicts must also be declared in real time, in writing to the board — before deliberations begin — stating the individual’s name, the nature of the interest, and the steps taken to keep them out, all recorded in the minutes. Conflicts already had to surface in the annual board report — the timing is what has now changed.