24/01/2019
Amendments to SEBI (Prohibition of Insider Trading) Regulations, 2015 - (w.e.f April 01, 2019)
1. Definition of Unpublished Price Sensitive Information (UPSI)
Omitted "material events in accordance with the listing agreement".
2. Policy for determination of legitimate purposes
The listed entity shall make a policy for determination of legitimate purpose as a part of “Codes of Fair Disclosure and Conduct”.
3. Possession of UPSI pursuant to ‘legitimate purpose’
Any person in receipt of UPSI pursuant to legitimate purpose shall be considered as an ‘insider’ and a due notice shall be given by the Company to such person to maintain confidentiality of such UPSI.
4. Structural digital database
a) Company shall make a structured digital database which shall consist of following information:
• Name of persons or entities who have access to UPSI;
• PAN of such person or entity;
• Any other identifier, if PAN is not available.
b) Database shall have adequate internal controls and checks to ensure non-tampering of database.
5. Trading while in possession of UPSI
Any trading done by a person while in possession of UPSI, shall be presumed to have been motivated by the knowledge and awareness of such UPSI.
6. Disclosure of off-market inter-se transfer between insiders
Any off-market inter-se transfer between insiders(earlier read as ‘promoters’) shall be reported to the Company within 2 working days by the insiders and the Company shall further notify the particulars of such transfer to Stock Exchange within 2 working days from the date of receipt of such disclosure.
7. Pre-clearances of trades
No pre-clearances of trades shall be required for any trade executed as per the approved trading plan.
8. Designated person
a) The term ‘Designated person’ has been substituted for the word ‘employee’ in the entire regulations.
b) The Board of Directors, in consultation with the Compliance Officer, shall specify the designated person on the basis of role and function in the organization and the access that such role and information would provide to UPSI in addition to seniority and professional designation. In addition to this, designated person shall include:
• Employees of such listed company, intermediary or fiduciary designated on the basis of their functional role or access to UPSI in the organization by their board of directors or analogous body;
• Employees of material subsidiaries of such listed companies designated on the basis of their functional role or access to UPSI in the organization by their board of directors;
• All promoters of listed companies and promoters who are individuals or investment companies for intermediaries or fiduciaries;
• Chief Executive Officer and employees upto two levels below Chief Executive Officer of such listed company, intermediary, fiduciary and its material subsidiaries irrespective of their functional role in the company or ability to have access to UPSI;
• Any support staff of listed company, intermediary or fiduciary such as IT staff or secretarial staff who have access to UPSI.
c) Every Designated person shall disclose to the company the number of securities acquired and disposed within 2 trading days of such transaction if the value of the securities traded, whether in one transaction or a series of transactions over any calendar quarter, aggregates to a traded value in excess of 10 lakh rupees or such other value as may be specified
9. Code of Conduct
The Board of Directors shall ensure that the Chief Executive Officer or Managing Director shall formulate a code of conduct,with their approval, to regulate, monitor and report trading by designated persons and immediate relatives of designated persons.
10. Institutional Mechanism for Prevention of Insider Trading
a) The Chief Executive Officer, Managing Director or such other analogous person of a listed company, intermediary or fiduciary shall put in place adequate and effective system of internal controls to ensure compliance with the requirements given in these regulations to prevent insider trading.
b) The internal controls shall include the following:
• all employees who have access to UPSI are identified as designated employee;
• all the UPSI shall be identified and its confidentiality shall be maintained as per the requirements of these regulations;
• adequate restrictions shall be placed on communication or procurement of UPSI as required by these regulations;
• lists of all employees and other persons with whom UPSI is shared shall be maintained and confidentiality agreements shall be signed or notice shall be served to all such employees and persons;
• all other relevant requirements specified under these regulations shall be compliedwith;
• periodic process review to evaluate effectiveness of such internal controls.
c) The board of directors of every listed company and the board of directors or head(s) of the organisation of intermediaries and fiduciaries shall ensure that the Chief Executive Officer or the Managing Director or such other analogous person ensures compliance with these regulations.
d) The Audit Committee of a listed company or other analogous body for intermediary or fiduciary shall review compliance with the provisions of these regulations at least once in a financial year and shall verify that the systems for internal control are adequate and are operating effectively.
e) Every listed company shall formulate written policies and procedures for inquiry in case of leak of UPSI or suspected leak of UPSI, which shall be approved by board of directors of the company and accordingly initiate appropriate inquiries on becoming aware of leak of unpublished price sensitive information or suspected leak of unpublished price sensitive information and inform the Board promptly of such leaks, inquiries and results of such inquiries.
f) The listed company shall have a whistle-blower policy and make employees aware of such policy to enable employees to report instances of leak of unpublished price sensitive information.
g) If an inquiry has been initiated by a listed company in case of leak of unpublished price sensitive information or suspected leak of unpublished price sensitive information, the relevant intermediaries and fiduciaries shall co-operate with the listed company in connection with such inquiry conducted by listed company.
