Blackout Periods – Unintended Consequences?

Your blackout policies may be negatively impacting your long-term incentive plans- here's how to mitigate that risk.

Under Canadian securities legislation, insiders (including all employees of a company) are restricted from trading in their company's securities when they are in possession of material non-public information (MNPI). Issuer imposed trading restrictions (often referred to as "blackouts") typically place further restrictions on an insider's ability to trade in the company's securities. While insider trading restrictions are essential for the proper functioning of the public markets, they place significant restrictions on the ability of senior executives to exercise or otherwise transact in the securities underlying their companies' equity incentive plans or their own personal holdings in these securities.