What does safe harbor mean in business and finance?
In: Economics
In general, a safe harbor is a law or regulation which explicitly makes an action legal so long as certain conditions are met. For example, a law might say if you build a fence a certain height, you are not responsible if your dog bites someone reaching over from the other side.
In finance, this refers to US laws about how a company discloses its financial projections to the public. So long as they follow the correct procedure, they are not liable if those projections don’t come true and people lose money. Otherwise, companies wouldn’t make those projects and investors would have less to go on.
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