Posted in Finance, Accounting and Economics Terms, Total Reads: 545
Definition: Non Open Market
As the name suggests, Non Open Market transactions do not take place in the open market instead the transactions of purchase and sell of shares are done directly with the Companies. These are private transactions and hence do not take place in the market exchange. Still non open market transactions are needed to be filed with the Stock and Exchange Commission(SEC) by the companies.
In Non Open Market, transactions takes place between the company and the insiders of the company and no other party is involved in this process. After the transaction is over, they are required to file the documents related to the transaction with the Stock and Exchange Commission.The documents are basically filed with SEC to show the investors that the transaction took place.
These transactions occurs when insiders of the company exercises their options. Suppose an insider has an option to buy shares then he can directly buy the shares from the company and are not required to deal with exchange.The insiders are free to sell those purchased shares in the open market whenever they want.This is the most common non open market transaction.Another type is the Tender Offer under which companies offer to repurchase shares from outside shareholders.