A quiet period is a period of time when a company’s management and marketing team must refrain from providing opinions or any form of additional information about their business. This period is typically set to preserve objectivity and to avoid any claims of insider trading or the dissemination of selective information to investors. Different types of businesses have different regulations concerning a quiet period.

For businesses conducting an initial public offering (IPO), the quiet period usually lasts from the time a company files for registration with the United States regulators up to the 40-day period after the stock starts trading. For public companies that are not conducting an IPO, the quiet period generally begins four weeks before the close of their business quarter.

The JOBS (Jumpstart Our Business Startups) Act passed in 2012 introduced the concept of ‘Emerging Growth Companies’. Companies in this category are exempt from certain regulations, including the 25-day research quiet period expected of most public companies.

The concept of a quiet period is important for businesses not only to ensure the rights of their shareholders and investors are protected, but because potentially misleading or overly optimistic statements during these periods can also lead to significant legal ramifications. During this period, companies should pay close attention to publications that can be interpreted as public disclosures, such as press releases, investor presentations, and more.

For companies looking to increase transparency and trust with their investors, observance of a quiet period is an essential part of their business strategy. It is generally expected that company leaders avoid violating regulations during this time. In addition, publicly traded companies should ensure that their leadership teams are well aware of the rules governing a quiet period and have the necessary organizational tools in place to protect themselves and their investors.