Securities and Exchange Board of India introduces the SEBI (Prohibition of Insider Trading) (Amendment) Regulations, 2018
The Securities and Exchange Board of India has through a recent Gazette Notification published the Securities and Exchange Board of India (Prohibition of Insider Trading) (Amendment) Regulations, 2018 (“Amendment Regulation”) which seeks to amend the existing Securities and Exchange Board of India (Prohibition of Insider Trading) Regulation, 2015 (“Principal Regulation”).
The Amendment Regulation effective from April 1, 2019 as per the Gazette Notification.
The Amendment Regulations have been introduced on the basis of the recommendations made by the FMC Committee headed by Mr. T.K. Viswanathan to modify and elaborate certain core aspects of the Principal Regulation which were previously ambiguous. The Amendment Regulation gives way to bring about more clarity and certainty to the Principal Regulation.
Key Highlights of the Changes introduced in the Amendment Regulation:
- The meaning of the term “Financially literate” has been inserted into the definition of a “Compliance Officer”. Financially literate means a person who has the ability to read and understand basic financial statements i.e. balance sheet, profit and loss account, and statement of cash flows.
- A new definition for “proposed to listed” has been introduced which has brought unlisted companiesthat are proposing to list their securities within the ambit of the Principal Regulation.
3.The Amendment Regulation has mandated the creation of a policy for determination of legitimate purposes for disclosure of unpublished price sensitive information within the Code of Fair Disclosure and Conduct.
- The Amendment Regulations mandated the maintenance of a digital database of the names persons/entities alongwith their PAN details or other such identifiers as prescribed under law with him unpublished price sensitive information is shared. Such digital database needs to be audited from time to time to ensure that there is no instance tampering.
- A new provision for institutional mechanisms of preventing inside trading has been introduced which has recommended certain internal controls that all listed companies, intermediaries and fiduciaries need to adopt.