SEBI (PROHIBITION OF INSIDER TRADING) REGULATIONS, 2015 - PowerPoint Presentation

1. SEBI (PROHIBITION OF INSIDER TRADING) REGULATIONS, 2015 March 07, 2022CS Sachin Jain1

2. What is the Intent of Prohibition of Insider Trading Regulation?2

3. Applicability of RegulationPUBLICListed companiesEquityDebtTo be listed CompaniesIntermediariesSEBI Regulated market intermediaries - brokers, merchant bankers investment AdvisorsFiduciariesAuditors, accounting firms, consultants, professional entities3

4. Important provisionsNo insider shallto any prson including other insidersU P S except if communication is in furtherance of legitimate purposes, performance of duties or discharge of legal obligations. 4communicate, provide, or allow access torelating to a company or securities listed or proposed to be listed

5. Important provisionsNo person Shallrelating to a company or securities listed or proposed to be listedby any insider of U P S except in furtherance of legitimate purposes, performance of duties or discharge of legal obligations5procure from or cause communication

6. Important provisionswhen in possession of U P S trade in securities that are listed or proposed to be listedmay prove innocence by demonstrating the circumstancesoff-market inter-se transfer between insidersblock deal window mechanism between persons who were in possession of the UPSI statutory or regulatory obligation to carry out bona fide transactionexercise of stock options & exercise price was pre-determined6No Insider Shall

7. Disclosure RequirementRégulation 67

8. Initial DisclosureRégulation 7 (1) (b)8

9. Disclosure requirement (Continual Disclosure)Regulation 7 (2) (a)Promoter, member of the promoter group, designated person and director Shall disclose to the company Number of securities acquired or disposed of within two trading days of such transaction Rs. 10 Lakh in Calendar qtrcompany shall notify particulars of such trading to the stock exchange within two trading days of receipt of the disclosure or from becoming aware of such information.9

10. 10

11. Insider a connected personin possession of or having access to UPSIorany person who is11

12. Connected Personany person who is (or has been during the six months prior to the concerned act)directly or indirectly, associated with the CompanyIn any capacity including by reason of frequent communication with its officersby being in any contractual, fiduciary or employment relationship by being a director, officer or an employeeholding any position including a professional or business whether temporary or permanentThat allows such person, directly or indirectlyaccess to UPSI or is reasonably expected to allow such access 12

13. Deemed Connected Personan immediate relative of connected personsholding, associate or subsidiary companyintermediary or employee or director thereofinvestment co., trustee co., asset management co. or employee or director thereofboard of trustees of MF or directors of the AMC of a MF or employee thereofdirectors or an employee, of a public financial institutionofficial or employee of a self-regulatory organization recognised or authorized by the SEBIa banker of the companyofficial of stock exchange or of clearing house or corporationa concern, firm, trust, HUF, company or aop wherein a director of a company or his immediate relative or banker of the company, has more than 10% of the holding or interest13

14. UPSIOrdinarily includesFinancial resultsDividendsChange in capital structuremergers, de-mergers, acquisitions, delistings, disposals and expansion of business and such other transactions changes in key managerial personnel Information relating to company or its securitiesnot generally availablebut if available is likely to materially affect price of securities14

15. TradingGenerally available informationMaterial Financial RelationshipImmediate RelativeTrading DayIncludes:•Buying•Selling•Dealing•Agreeing to subscribe, buy, sell or deal in any securitiesInformation that is accessible to public on non-discriminatory basis or is ordinarily or generally availableRelationship in which one person is recipient of any kind of payment such as by way of gift or loan•At least of 25% of annual income of DP•During immediately preceding 12 months•Does not include arm’s length transactionsIncludes -spouse, parent, sibling and child of such person or the spouse•who is financially dependent on such person or consults such persons in taking decisions relating to trading in securitiesDay on which the recognized stock exchanges are open for trading15

16. Identification of designated Persons (DPs)Employee of Company/ intermediary/ fiduciaryEmployee of material subsidiaries All Promoters of Company/ Indvidial Pomoter or investment company for intermediaries or fiduciariesCEO and employees two level below CEO of Co./ intermediary/ fiduciary and its material subsidiary irrespective of their functional role Support staff of co./ intermediary/ fiduciary e.g. secretarial staff, IT staff having access to UPSI“material subsidiary” means a subsidiary, whose income or net worth exceeds 10% of the consolidated income or net worth respectively, of the listed entity and its subsidiaries in the immediately preceding accounting year.Designated basis their functional role or access to UPSI16

17. 17

18. Policies & Procedure for leak of UPSI 18Mechanism to prevent any leakProcess for inquiry in case of leak/ suspected leakPrompt intimation to SEBI of such leaksHow to handle in case of leakAction against responsible person -Authorization to ACB/ SRC to take actionEducate / sensitisatise employees regarding reporting of leak/ suspected leak of UPSIIdentification of source of leakagePlug loopholes in internal control system

19. Code of Fair Disclosure by listed companyTo be uploaded on the website of the Company19

20. Policy for determination of “legitimate purposesLegitimate Purposes - sharing of UPSI by an Insider in the ordinary course of business, where such communication is for performance of duties or discharge of legal obligations or for need-to-know basis. In the Ordinary of Course of Business or for Corporate PurposesIn furtherance of fiduciary duties or in fulfillment of any statutory obligationIn the interest of other shareholders / stakeholdersnot being shared for personal benefit even if it may result in personal gain consequentlyUPSI to shared with person only if NDA is executed20

21. Maintenance of Structured Digital Database “The board of directors or head(s) of the organisation of every person required to handle upsi shall ensure………..” A structured digital database needs to be maintained w.r.t. persons or entities with whom UPSI is shared21

22. Contents of Structured Digital Database Serial NoInformation shared byInformation shared withOther DetailsName*PAN*Other Identifier No TypeOther Identifier NoInsider Name*Organisation NamePAN*Other Identifier No TypeOther Identifier NoE MailDate of sharing information*Nature of Information shared*Mode of sharing UPSIConfidentiality AgreementDate of AgreementDescription of AgreementNotice To Be Sent (Yes/No)*22Serial NoInformation shared byNamePANOther Identifier No TypeOther Identifier NoInformation shared withNameOrganisation NamePANOther Identifier No TypeOther Identifier NoE MailOther DetailsDate of sharing informationNature of Information sharedMode of sharing Confidentiality AgreementDate of AgreementDescription of Agreement

23. Code of conduct by listed company23

24. Code of conduct by listed company24

25. Code of conduct by listed company25

26. Code of conduct by listed company (Reg.9)26

27. Code of conduct by listed company27

28. Code of conduct for intermediaries & fiduciaries28To protect UPSI provided to fiduciaries and intermediaries.Norms are same as CoC of Listed entities.To regulate, monitor and report trading by its DPs and their immediate relatives.CO has to maintain ‘restricted list’ with widespread control for restricting use of UPSI. The head of organisation shall be responsible for formulating the code.Identification of DPsFunctional-Staff having access to information, in case of consultant, point of contact of the listed co. Seniority-Basis designation - senior partners, associates etc.

29. Compliance Officer’s obligationActionsMaintenance of records w.r.t. :Pre-clearance of trades to DP’sDatabase of DPs and immediate relativesDetails of relaxation of contra trade restrictions;Determining window closure /Opening;Trading plans approved, if any;Details of programmes undertaken for sensitizing the DPs about their responsibilities under the RegulationsReport to ACB Chairman / Board Chairman - trading in the securities by the DPs, violations of CoC at regular intervals but not less than once a yearTrades pre-cleared;Details of violations under the Code and Regulations by DPsApproval of Trading Plan;Details of Trades executed pursuant to pre-clearanceList of promoters, promoter group, directors and DPs.Timely disclosure as stipulatedshareholdings of DPs in the securities of the Company;Record of proceedings of the Inquiry Committee.Grant relaxation from strict application of contra trade restrictions;Initial and Continual Disclosures received under the RegulationsPrompt disclosure about any violation of the Codes and Regulations by any DPs to SESDD for sharing of UPSI29