SEBI amends Prohibition of Insider Trading Regulations; clarifies on the Standards for Code of Conduct for Listed Companies and Intermediaries and Fiduciaries

SEBI amends Prohibition of Insider Trading Regulations; clarifies on the Standards for Code of Conduct for Listed Companies and Intermediaries and Fiduciaries

August 1, 2019 CORP, Industries, SEBI, SEBI, states 0

The Securities and Exchange Board of India (“SEBI”) has in a notification dated July 25, 2019, issued amendments to the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015 (“Regulations”).

The Amendment brings in further clarity on the Minimum Standards for Code of Conduct for Listed Companies and Intermediaries and Fiduciaries to Regulate, Monitor and Report Trading by Designated Persons.

Schedule B- Minimum Standards for Code of Conduct for Listed Companies to Regulate, Monitor and Report Trading by Designated Persons.

  1. The Amendment provides that the trading restriction period will be mandatorily made applicable from the end of every quarter till 48 hours after the declaration of financial results. The earlier provision was not clear on this and read “Trading restriction period can be made applicable…”.
  1. The trading restriction window provided no longer applies in the case of the following transactions:
  • An off-market inter-se transfer between insiders who were in possession of the same unpublished price sensitive information without being in breach of Regulation 3 and both parties had made a conscious and informed trade decision.
  • A transaction carried out through the block deal window mechanism between persons who were in possession of the unpublished price sensitive information without being in breach of regulation 3 and both parties had made a conscious and informed trade decision
  • A transaction carried out pursuant to a statutory or regulatory obligation to carry out a bona fide transaction.
  • A transaction undertaken pursuant to the exercise of stock options in respect of which the exercise price was pre-determined in compliance with applicable regulations.
  • Trades pursuant to a trading plan set up in accordance with regulation 5
  • Transaction in respect of a pledge of shares for a bonafide purpose such as raising of funds, subject to pre-clearance by the compliance officer and compliance with the respective regulations made by SEBI.
  • Transactions which are undertaken in accordance with respective regulations made by SEBI such as acquisition by conversion of warrants or debentures, subscribing to rights issue, further public issue, preferential allotment or tendering of shares in a buyback offer, open offer, delisting offer.
  1. The explanation defining the term term “material financial relationship” has been amended to restrict the definition to loan or gift from a designated person only.

Schedule C – Minimum Standards for Code of Conduct for Intermediaries and Fiduciaries to Regulate, Monitor and Report Trading by Designated Persons

  1. Regarding disclosure of name of educational institution of designated persons, it has been specified that the educational institution must be one from which such designated person has graduated and not just studied.
  1. The explanation defining the term “material financial relationship” has been amended to restrict the definition to loan or gift from a designated person only.

The Amendment is effective immediately.

Source: Securities and Exchange Board of India

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