Prohibition_of_Insider_Trading_Oct29_2020
3 (1)No insider shall communicate, provide, or allow access to any unpublished pricesensitive information, relating to a company or securities listed or proposed to be listed, to anyperson including other insiders except where such communication is in furtherance of legitimatepurposes, performance of duties or discharge of legal obligations.This provision is intended to cast an obligation on all insiders who are essentiallypersons in possession of unpublished price sensitive information to handle such information withcare and to deal with the information with them when transacting their business strictly on aneed-to-know basis. It is also intended to lead to organisations developing practices based onneed-to-know principles for treatment of information in their possession.
3 (2)No person shall procure from or cause the communication by any insider of unpublishedprice sensitive information, relating to a company or securities listed or proposed to be listed,except in furtherance of legitimate purposes, performance of duties or discharge of legalobligations.This provision is intended to impose a prohibition on unlawfully procuringpossession of unpublished price sensitive information. Inducement and procurement ofunpublished price sensitive information not in furtherance of one s legitimate duties anddischarge of obligations would be illegal under this provision.7[(2A) The board of directors of a listed company shall make a policy for determination of legitimate purposes as a part of Codes of Fair Disclosure and Conduct formulated underregulation 8.of unpublished price sensitive information in the ordinary course of business by an insider with2018 .partners, collaborators, lenders, customers, suppliers, merchant bankers, legal advisors, auditors,insolvency professionals or other advisors or consultants, provided that such sharing has not beencarried out to evade or circumvent the prohibitions of these regulations.]8[(2B) Any person in receipt of unpublished price sensitive information pursuant to a legitimatepurpose shall be considered an insider for purposes of these regulations and due notice shallbe given to such persons to maintain confidentiality of such unpublished price sensitiveinformation in compliance with these regulations.
3 (3)Notwithstanding anything contained in this regulation, an unpublished price sensitiveinformation may be communicated, provided, allowed access to or procured, in connection witha transaction that would: (i)entail an obligation to make an open offer under the takeover regulations wherethe board of directors of the 9[listed ] company is of informed opinion that 10[sharing ofsuch information] is in the best interests of the company ;It is intended to acknowledge the necessity of communicating, providing,allowing access to or procuring UPSI for substantial transactions such as takeovers,mergers and acquisitions involving trading in securities and change of control to assess apotential investment. In an open offer under the takeover regulations, not only would thesame price be made available to all shareholders of the company but also all informationnecessary to enable an informed divestment or retention decision by the publicshareholders is required to be made available to all shareholders in the letter of offerunder those regulations.2018 2018 Insider Trading) (Amendment) Regulations, 2018 .(ii)not attract the obligation to make an open offer under the takeover regulations butwhere the board of directors of the 11[listed] company is of informed opinion 12[thatsharing of such information] is in the best interests of the company and the informationthat constitute unpublished price sensitive information is disseminated to be madegenerally available at least two trading days prior to the proposed transaction beingeffected in such form as the board of directors may determine 13[to be adequate and fairto cover all relevant and material facts].It is intended to permit communicating, providing, allowing access to orprocuring UPSI also in transactions that do not entail an open offer obligation under thetakeover regulations 14[when authorised by the board of directors if sharing of suchinformation] is in the best interests of the company . The board of directors, however,would cause public disclosures of such unpublished price sensitive information wellbefore the proposed transaction to rule out any information asymmetry in the market.
3 (4)For purposes of sub-regulation (3), the board of directors shall require the parties toexecute agreements to contract confidentiality and non-disclosure obligations on the part of suchparties and such parties shall keep information so received confidential, except for the purpose ofsub-regulation (3), and shall not otherwise trade in securities of the company when in possessionof unpublished price sensitive information.
3 (5) The board of directors or head(s) of the organisation of every person required to handleunpublished price sensitive information shall ensure that a structured digital database is2018 of Insider Trading) (Amendment) Regulations, 2018 2018 (Amendment) Regulations, 2018 15 Substituted by Securities and Exchange Board of India (Prohibition of Insider Trading) (Amendment)Regulations, 2020 . Prior to the substitution, sub-regulation 5 read as follows: - The board of directors shall ensure that a structured digital database is maintained containing the names ofsuch persons or entities as the case may be with whom information is shared under this regulation alongwith the Permanent Account Number or any other identifier authorized by law where Permanent Accountmaintained containing the nature of unpublished price sensitive information and the names ofsuch persons who have shared the information and also the names of such persons with whominformation is shared under this regulation along with the Permanent Account Number or anyother identifier authorized by law where Permanent Account Number is not available. Suchdatabase shall not be outsourced and shall be maintained internally with adequate internalcontrols and checks such as time stamping and audit trails to ensure non-tampering of thedatabase.]
3 (6) The board of directors or head(s) of the organisation of every person required to handleunpublished price sensitive information shall ensure that the structured digital database ispreserved for a period of not less than eight years after completion of the relevant transactionsand in the event of receipt of any information from the Board regarding any investigation orenforcement proceedings, the relevant information in the structured digital database shall be
4 (1)No insider shall trade in securities that are listed or proposed to be listed on astock exchange when in possession of unpublished price sensitive information:unpublished price sensitive information, his trades would be presumed to have been motivatedby the knowledge and awareness of such information in his possession.]Provided that the insider may prove his innocence by demonstrating the circumstancesincluding the following: Number is not available. Such databases shall be maintained with adequate internal controls and checkssuch as time stamping and audit trails to ensure non-tampering of the database. (Amendment) Regulations, 2018 (i) the transaction is an off-market inter-se transfer between 18[insiders] who were inpossession of the same unpublished price sensitive information without being in breachof regulation 3 and both parties had made a conscious and informed trade decision.19[Provided that such unpublished price sensitive information was not obtained undersub-regulation (3) of regulation 3 of these regulations.Provided further that such off-market trades shall be reported by the insiders to thecompany within two working days. Every company shall notify the particulars of suchtrades to the stock exchange on which the securities are listed within two trading daysfrom receipt of the disclosure or from becoming aware of such information.];20[(ii) the transaction was carried out through the block deal window mechanism betweenpersons who were in possession of the unpublished price sensitive information withoutbeing in breach of regulation 3 and both parties had made a conscious and informed tradedecision;Provided that such unpublished price sensitive information was not obtained by eitherperson under sub-regulation (3) of regulation 3 of these regulations.(iii) the transaction in question was carried out pursuant to a statutory or regulatoryobligation to carry out a bona fide transaction.(iv) the transaction in question was undertaken pursuant to the exercise of stock optionsin respect of which the exercise price was pre-determined in compliance with applicableregulations.](Amendment) Regulations, 2018 2018 2018 (v)in the case of non-individual insiders: (a)the individuals who were in possession of such unpublished price sensitiveinformation were different from the individuals taking trading decisions and suchdecision-making individuals were not in possession of such unpublished pricesensitive information when they took the decision to trade; and(b)appropriate and adequate arrangements were in place to ensure that theseregulations are not violated and no unpublished price sensitive information wascommunicated by the individuals possessing the information to the individualstaking trading decisions and there is no evidence of such arrangements havingbeen breached;(vi)the trades were pursuant to a trading plan set up in accordance with regulation 5.unpublished price sensitive information, his trades would be presumed to have beenmotivated by the knowledge and awareness of such information in his possession. Thereasons for which he trades or the purposes to which he applies the proceeds of thetransactions are not intended to be relevant for determining whether a person hasviolated the regulation. He traded when in possession of unpublished price sensitiveinformation is what would need to be demonstrated at the outset to bring a charge. Oncethis is established, it would be open to the insider to prove his innocence bydemonstrating the circumstances mentioned in the proviso, failing which he would haveviolated the prohibition.
4 (2)In the case of connected persons the onus of establishing, that they were not in possessionof unpublished price sensitive information, shall be on such connected persons and in othercases, the onus would be on the Board.
5 (1)An insider shall be entitled to formulate a trading plan and present it to thecompliance officer for approval and public disclosure pursuant to which trades may be carriedout on his behalf in accordance with such plan.This provision intends to give an option to persons who may be perpetually inpossession of unpublished price sensitive information and enabling them to trade in securities ina compliant manner. This provision would enable the formulation of a trading plan by aninsider to enable him to plan for trades to be executed in future. By doing so, the possession ofunpublished price sensitive information when a trade under a trading plan is actually executedwould not prohibit the execution of such trades that he had pre-decided even before theunpublished price sensitive information came into being.
5 (2)Such trading plan shall: (i)not entail commencement of trading on behalf of the insider earlier than sixmonths from the public disclosure of the plan;It is intended that to get the benefit of a trading plan, a cool-off period ofsix months is necessary. Such a period is considered reasonably long for unpublishedprice sensitive information that is in possession of the insider when formulating thetrading plan, to become generally available. It is also considered to be a reasonableperiod for a time lag in which new unpublished price sensitive information may come intobeing without adversely affecting the trading plan formulated earlier. In any case, itshould be remembered that this is only a statutory cool-off period and would not grantimmunity from action if the insider were to be in possession of the same unpublishedprice sensitive information both at the time of formulation of the plan and implementationof the same.(ii)not entail trading for the period between the twentieth trading day prior to the lastday of any financial period for which results are required to be announced by the issuer ofthe securities and the second trading day after the disclosure of such financial results;Since the trading plan is envisaged to be an exception to the general ruleprohibiting trading by insiders when in possession of unpublished price sensitiveinformation, it is important that the trading plan does not entail trading for a reasonableperiod around the declaration of financial results as that would generate unpublishedprice sensitive information.(iii)entail trading for a period of not less than twelve months;It is intended that it would be undesirable to have frequent announcementsof trading plans for short periods of time rendering meaningless the defence of areasonable time gap between the decision to trade and the actual trade. Hence it is feltthat a reasonable time would be twelve months.(iv)not entail overlap of any period for which another trading plan is already inexistence;It is intended that it would be undesirable to have multiple trading plansoperating during the same time period. Since it would be possible for an insider to timethe publication of the unpublished price sensitive information to make it generallyavailable instead of timing the trades, it is important not to have the ability to initiatemore than one plan covering the same time period.(v)set out either the value of trades to be effected or the number of securities to betraded along with the nature of the trade and the intervals at, or dates on which suchtrades shall be effected; andIt is intended that while regulations should not be too prescriptive andrigid about what a trading plan should entail, they should stipulate certain basicparameters that a trading plan should conform to and within which, the plan may beformulated with full flexibility. The nature of the trades entailed in the trading plan i.e.acquisition or disposal should be set out. The trading plan may set out the value ofsecurities or the number of securities to be invested or divested. Specific dates or specifictime intervals may be set out in the plan.(vi)not entail trading in securities for market abuse.from bringing proceedings for market abuse. For instance, in the event of manipulativetiming of the release of unpublished price sensitive information to ensure that tradingunder a trading plan becomes lucrative in circumvention of regulation 4 being detected,it would be open to initiate proceedings for alleged breach of SEBI (Prohibition of
2003 (3)The compliance officer shall review the trading plan to assess whether the plan wouldhave any potential for violation of these regulations and shall be entitled to seek such expressundertakings as may be necessary to enable such assessment and to approve and monitor theimplementation of the plan.21[Provided that pre-clearance of trades shall not be required for a trade executed as per anapproved trading plan.2018 Provided further that trading window norms and restrictions on contra trade shall not beapplicable for trades carried out in accordance with an approved trading plan.]It is intended that the compliance officer would have to review and approve theplan. For doing so, he may need the insider to declare that he is not in possession ofunpublished price sensitive information or that he would ensure that any unpublished pricesensitive information in his possession becomes generally available before he commencesexecuting his trades. Once satisfied, he may approve the trading plan, which would then have tobe implemented in accordance with these regulations.
2003 (4)The trading plan once approved shall be irrevocable and the insider shall mandatorilyhave to implement the plan, without being entitled to either deviate from it or to execute anytrade in the securities outside the scope of the trading plan.Provided that the implementation of the trading plan shall not be commenced if any unpublishedprice sensitive information in possession of the insider at the time of formulation of the plan hasnot become generally available at the time of the commencement of implementation and in suchevent the compliance officer shall confirm that the commencement ought to be deferred untilsuch unpublished price sensitive information becomes generally available information so as toavoid a violation of sub-regulation (1) of regulation 4.It is intended that since the trading plan is an exception to the general rule that aninsider should not trade when in possession of unpublished price sensitive information, changingthe plan or trading outside the same would negate the intent behind the exception. Otherinvestors in the market, too, would factor the impact of the trading plan on their own tradingdecisions and in price discovery. Therefore, it is not fair or desirable to permit the insider todeviate from the trading plan based on which others in the market have assessed their views onthe securities.The proviso is intended to address the prospect that despite the six-month gap between theformulation of the trading plan and its commencement, the unpublished price sensitiveinformation in possession of the insider is still not generally available. In such a situation,commencement of the plan would conflict with the over-riding principle that trades should not beexecuted when in possession of such information. If the very same unpublished price sensitiveinformation is still in the insider s possession, the commencement of execution of the tradingplan ought to be deferred.
2003 (5)Upon approval of the trading plan, the compliance officer shall notify the plan to thestock exchanges on which the securities are listed.It is intended that given the material exception to the prohibitory rule inregulation 4, a trading plan is required to be publicly disseminated. Investors in the market atlarge would also factor the potential pointers in the trading plan in their own assessment of thesecurities and price discovery for them on the premise of how the insiders perceive the prospects
6 (1)Every public disclosure under this Chapter shall be made in such form as may bespecified.
6 (2)The disclosures to be made by any person under this Chapter shall include those relatingto trading by such person s immediate relatives, and by any other person for whom such persontakes trading decisions .It is intended that disclosure of trades would need to be of not only those executedby the person concerned but also by the immediate relatives and of other persons for whom the person concerned takes trading decisions. These regulations are primarily aimed at preventingabuse by trading when in possession of unpublished price sensitive information and therefore,what matters is whether the person who takes trading decisions is in possession of suchinformation rather than whether the person who has title to the trades is in such possession.
6 (3)The disclosures of trading in securities shall also include trading in derivatives ofsecurities and the traded value of the derivatives shall be taken into account for purposes of thisChapter:Provided that trading in derivatives of securities is permitted by any law for the timebeing in force.
6 (4)The disclosures made under this Chapter shall be maintained by the company, for a
7 (1) Initial Disclosures.(a). Every promoter 22[, member of the promoter group] , key managerial personnel anddirector of every company whose securities are listed on any recognised stockexchange shall disclose his holding of securities of the company as on the date ofthese regulations taking effect, to the company within thirty days of these regulationstaking effect;(b). Every person on appointment as a key managerial personnel or a director of thecompany or upon becoming a 23[promoter or member of the promoter group] shall2019 (Amendment) Regulations, 2019 disclose his holding of securities of the company as on the date of appointment orbecoming a promoter, to the company within seven days of such appointment orbecoming a promoter.
7 ( 2 ) C o n t i n u a l D i s c l o s u r e s . ( a ) . E v e r y p r o m o t e r 2 4 [ , m e m b e r o f t h e p r o m o t e r g r o u p ] , 2 5 [ d e s i g n a t e d p e r s o n ] a n d d i r e c t o r o f e v e r y c o m p a n y s h a l l d i s c l o s e t o t h e c o m p a n y t h e n u m b e r o f s u c h s e c u r i t i e s a c q u i r e d o r d i s p o s e d o f w i t h i n t w o t r a d i n g d a y s o f s u c h t r a n s a c t i o n i f t h e v a l u e o f t h e s e c u r i t i e s t r a d e d , w h e t h e r i n o n e t r a n s a c t i o n o r a s e r i e s o f t r a n s a c t i o n s o v e r a n y c a l e n d a r q u a r t e r , a g g r e g a t e s t o a t r a d e d v a l u e i n e x c e s s o f t e n l a k h r u p e e s o r s u c h o t h e r v a l u e a s m a y b e s p e c i f i e d ; ( b ) . E v e r y c o m p a n y s h a l l n o t i f y t h e p a r t i c u l a r s o f s u c h t r a d i n g t o t h e s t o c k e x c h a n g e o n w h i c h t h e s e c u r i t i e s a r e l i s t e d w i t h i n t w o t r a d i n g d a y s o f r e c e i p t o f t h e d i s c l o s u r e o r f r o m b e c o m i n g a w a r e o f s u c h i n f o r m a t i o n . i n c r e m e n t a l t r a n s a c t i o n s a f t e r a n y d i s c l o s u r e u n d e r t h i s s u b - r e g u l a t i o n , s h a l l b e m a d e w h e n t h e t r a n s a c t i o n s e f f e c t e d a f t e r t h e p r i o r d i s c l o s u r e c r o s s t h e t h r e s h o l d s p e c i f i e d i n c l a u s e ( a ) o f s u b - r e g u l a t i o n ( 2 ) . 2 6 [ ( c ) T h e a b o v e d i s c l o s u r e s s h a l l b e m a d e i n s u c h f o r m a n d s u c h m a n n e r a s m a y b e s p e c i f i e d b y t h e B o a r d f r o m t i m e t o t i m e . ] D i s c l o s u r e s b y o t h e r c o n n e c t e d < s p a n c l a s s = l i g h t - g r e e n t i t l e = S u b j e c t - I n d i v i d u a l > p e r s o n s < / s p a n > .
7 (3) Any company whose securities are listed on a stock exchange may, at its discretion require any other connected person or class of connected persons to make disclosures of holdings 2019 (Amendment) Regulations, 2018 2020 . and trading in securities of the company in such form and at such frequency as may be determined by the company in order to monitor compliance with these regulations. whom it has to provide unpublished price sensitive information. This provision confers discretion on any company to seek such information. For example, a listed company may ask that a
7A (1) In this Chapter, unless the context otherwise requires:-(a) Investor Protection and Education Fund means the Investor Protection and EducationFund created by the Board under section 11 of the Act;(b) Informant means an individual(s), who voluntarily submits to the Board a VoluntaryInformation Disclosure Form relating to an alleged violation of insider trading laws thathas occurred, is occurring or has a reasonable belief that it is about to occur, in a mannerprovided under these regulations, regardless of whether such individual(s) satisfies therequirements, procedures and conditions to qualify for a reward;(c) Informant Incentive Committee means the High Powered Advisory Committeeconstituted by the Board in the manner as may be specified under regulation 11 of theSecurities and Exchange Board of India (Settlement Proceedings) Regulations, 2018.(d) insider trading laws means the following provisions of securities laws,-i. Section 15G of the Act;Regulations, 2019 ii.iii.iv.v.regulation 3 of these regulations;regulation 4 of these regulations;regulation 5 of these regulations; andregulation 9 or regulation 9A of these regulations, in so far as they pertain totrading or communication of unpublished price sensitive information.(e) irrelevant, vexatious and frivolous information includes, reporting of informationwhich in the opinion of the Board , -(i) Does not constitute a violation of insider trading laws; or(ii)Is rendered solely for the purposes of malicious prosecution; or(iii) Is rendered intentionally in an effort to waste the time and resource of the Board .(f) Legal Representative means a duly authorised individual who is admitted to thepractice of law in India;(g) Monetary Sanctions shall mean any non-monetary settlement terms or any direction ofthe Board , in the nature of disgorgement under securities laws aggregating to at leastRupees one crore arising from the same operative facts contained in the originalinformation.(h) Original Information means any relevant information submitted in accordance withthese regulations pertaining to any violation of insider trading laws that is:-(i)derived from the independent knowledge and analysis of the Informant;(ii) not known to the Board from any other source, except where the Informant is theoriginal source of the information;(iii)is sufficiently specific, credible and timely to - (1) commence an examination orinquiry or audit, (2) assist in an ongoing examination or investigation or inquiry oraudit, (3) open or re-open an investigation or inquiry, or (4) inquire into a differentconduct as part of an ongoing examination or investigation or inquiry or audit directedby the Board receipt of the duly completed Voluntary Information Disclosure Form by the Board , aperiod of not more than three years has elapsed since the date on which the firstalleged trade constituting violation of insider trading laws was executed];(iv) not exclusively derived from an allegation made in a judicial or administrativehearing, in a Governmental report, hearing, audit, or investigation, or from the newsmedia, except where the Informant is the original source of the information; and(v)not irrelevant or frivolous or vexatious.information already possessed by the Board is not original information.(i) own analysis means the examination and evaluation of the relevant information by theInformant that may be publicly available, but which reveals analysis that is not knownto SEBI:Providedthat such analysisis not derived from professional or confidentialcommunication protected under the Indian Evidence Act, 1872 (1 of 1872);(j) own knowledge means relevant information in the possession of the Informant notderived from publicly available sources:Provided that such knowledge is not derived from professional or confidentialcommunications protected under the Indian Evidence Act, 1872 (1 of 1872);(k) Reward means any gratuitous monetary amount for which an Informant is declaredeligible as per the provisions of these regulations;(l) securities laws means the Act, the Securities Contract (Regulations) Act, 1956 (42 of1956), the Depositories Act, 1996 (22 of 1996), the relevant provisions of any other lawto the extent it is administered by the Board and the relevant rules and regulations madethereunder;Regulations, 2020 .(m) voluntarily providing information means providing the Board with information beforereceiving any request, inquiry, or demand from the Board , any other Central or State
7B (1) An Informant shall submit Original Information by furnishing the Voluntary Information Disclosure Form to the Office of Informant Protection of the Board in the format and manner set out in Schedule D. The Voluntary Information Disclosure Form may be submitted through informant s legal representative: Provided that where the Informant does not submit the Voluntary Information Disclosure Form through a legal representative, the Board may require such Informant to appear in person to ascertain his/her identity and the veracity of the information so provided. received in a manner not in accordance with the manner provided under these regulations, the Board may require such information to be filed with it in accordance with these regulations or reject the same.
7B (2) The legal representative shall,-i. Verify the identity and contact details of the Informant ;ii. Unless otherwise required by the Board, maintain confidentiality of the identity andexistence of the Informant , including the original Voluntary Information DisclosureForm;iii. Undertake and certify that he/she,-(a) Has reviewed the completed and signed Voluntary Information Disclosure Form forcompleteness and accuracy and that the information contained therein is true, correctand complete to the best of his/her knowledge;(b) Has obtained a irrevocable consent from the Informant to provide to the Board withoriginal Voluntary Information Disclosure Form whenever required by the Board;and(c) Agrees to be legally obligated to provide the original Voluntary InformationDisclosure Form within seven (7) calendar days of receiving such requests from theBoard.iv. Submits to the Board, the copy of the Voluntary Information Disclosure Form in themanner provided in Schedule D of these regulations along with a signed certificate asrequired under clause (iii) of this sub-regulation (2).
7B (3) An Informant shall while submitting the Voluntary Information Disclosure Form shall expunge such information from the content of the information which could reasonably be expected to reveal his or her identity and in case where such information cannot be expunged,
7C (1) The Board may designate a division to function as the independent Office of Informant Protection .
7C (2) The Office of Informant Protection shall perform such functions as may be specified by the Board , including,-i. Receiving and registering the Voluntary Information Disclosure Form;ii. Making all necessary communications with the Informant;iii. Maintaining a hotline for the benefit of potential Informant;iv. Maintaining confidentiality of the legal representative of the Informant and act as aninterface between the Informant and the officers of the Board ;v.Interacting with the Informant Incentive Committee;vi.vii.Issuing press releases and rewards relating to Informant; andSubmitting an annual report to the Board relating to the functioning of the Office ofInformant Protection.
7C (3) On receipt of the Voluntary Information Disclosure Form, the Office of Informant Protection shall communicate the substance of the information along with the evidence submitted by the informant to the relevant department or division of the Board for examination and initiation of necessary action, if any.
7C (4) The Board shall not be required to send any intimation or acknowledgement to the Informant or any other person, of the examination or action initiated by the Board, if any, pursuant to receipt of the Voluntary Information Disclosure Form or information under these regulations,
7D (1) Upon collection or substantial recovery of the monetary sanctions amounting to at least twice the Reward, the Board may at its sole discretion, declare an Informant eligible for Reward and intimate the Informant or his or her legal representative to file an application in the format provided in Schedule-E for claiming such Reward: Provided that the amount of Reward shall be ten percent of the monetary sanctions collected or recovered and shall not exceed Rupees One crore or such higher amount as the Board may specify from time to time: Provided further that the Board may if deemed fit, out of the total Reward payable, grant an interim reward not exceeding Rupees Ten lacs or such higher amount as the Board may specify from time to time, on the issue of final order by the Board against the person directed todisgorge.
7D (2) In case of more than one Informant jointly providing the Original Information, the Reward, as specified in the intimation under sub-regulation (1), shall be divided equally amongst the total number of Informants.
7D (3) The Reward under these regulations shall be paid from the Investor Protection and Education
7E (1) The amount of the Reward, if payable, shall be determined by the Board.
7E (2) While determining the amount of Reward under sub-regulation (1), the Board may specify the factors that may be taken into consideration by the Informant Incentive Committee.
7E (3) An Informant may be eligible for a Reward whether or not he reported the matter to his organization as per its internal legal and compliance procedures and irrespective of such organization s compliance officer subsequently providing the same Information to the Board.
7F (1) Informants who are considered tentatively eligible for a Reward, shall submit the Informant Reward Claim Form set out in Schedule E to the Board within the period specified in the intimation sent by the Board.
7F (2) Prior to the payment of a Reward, an Informant shall directly or through his or her legal representative , disclose his or her identity and provide such other information as the Board mayrequire.
7G No Reward shall be made to an Informant:-(1) who does not submit original information;(2) who has acquired the Original Information, through or as a member, officer, or an employeeof:-(i)any regulatory agency constituted by or under any law in India or outside India, includingthe Board;(ii)any self-regulatory organization;(iii) the surveillance or investigation wings of any recognised stock exchange or clearingcorporation; or(iv)any law enforcement organization including the police or any central or state revenueauthorities.
7G (3) against whom the Board may initiate or has initiated criminal proceedings under securities laws;(4) who wilfully refused to cooperate with the Board during its course of investigation, inquiry,audit, examination or other proceedings under securities laws;(5) who:(i)knowingly makes any false, fictitious, or fraudulent statement or representation; or(ii)uses any false writing or document knowing that the writing or document contains anyfalse, fictitious, or fraudulent statement or entry; or(iii)fails to furnish the complete information available with him or accessible by him inrelation to the alleged violation.
7G (6) who is obligated, under any law or otherwise, to report such Original Information to the Board,including a compliance officer under securities laws.
7H (1) Any information including Original Information may, at the discretion of the Board, be made available:(a) when it is required to be disclosed in connection with any legal proceedings infurtherance of the Board s legal position;(b) as permitted by these regulations ; or(c) as may be otherwise required or permitted by law.
7H (2) Original Information may, at the discretion of the Board, be made available to -(i) any regulatory agency constituted by or under any law in India or outside India;(ii) any self-regulatory organization;(iii) the surveillance or investigation wings of any recognised stock exchange or clearingcorporation; or(iv) any law enforcement organization including the police or any central or state revenueauthorities; or(v) a public prosecutor in connection with any criminal proceedings.Provided that sharing of information shall be in accordance with such assurances ofconfidentiality as the Board determines appropriate.ability of the public prosecutor to share such evidence with potential witnesses or accused inconnection with any criminal proceedings.
7H (3) The Original Information and identity provided by an Informant shall be held in confidence and exempted from disclosure under clauses (g) and (h) of sub-section (1 ) of section 8 of the Right to Information Act, 2005 (No. 22 of 2005).
7H (4) Subject to the law of evidence for the time being in force, nothing in these regulations shall prejudice the right of the Board to use or to rely on information received otherwise.
7H (5) No person shall have the right to compel disclosure of the identity, existence of an Informant or the information provided by an Informant, except to the extent relied upon in any proceeding initiated against such person by the Board. shall be maintained throughout the process of investigation, inquiry and examination as well as during any proceedings before the Board and save where the evidence of the Informant is required during such proceedings, advance notice of such evidence may be provided to the noticee at least seven (7) working days prior to the date of the scheduled hearing for evidence. request maintenance of confidentiality of the identity and existence of an Informant in suchproceeding.
7I (1) Every person required to have a Code of Conduct under these regulations shall ensure that such a Code of Conduct provides for suitable protection against any discharge, termination, demotion, suspension, threats, harassment, directly or indirectly or discrimination against any employee who files a Voluntary Information Disclosure Form, irrespective of whether the information is considered or rejected by the Board or he or she is eligible for a Reward under these regulations, by reason of:(i)(ii)filing a Voluntary Information Disclosure Form under these regulations;testifying in, participating in, or otherwise assisting or aiding the Board in anyinvestigation, inquiry, audit, examination or proceeding instituted or about to be institutedfor an alleged violation of insider trading laws or in any manner aiding the enforcementaction taken by the Board; or(iii) breaching any confidentiality agreement or provisions of any terms and conditions ofemployment or engagement solely to prevent any employee from cooperating with theBoard in any manner.employment may become privy to information relating to violation of insider trading laws andfiles a Voluntary Information Disclosure Form under these regulations and is a director , partner,regular or contractual employee, but does not include an advocate.(i) the Board has taken up any enforcement action in furtherance of information provided bysuch person; or(ii) the information provided fulfils the criteria of being considered as an OriginalInformation under these regulations.
7I (2) Nothing in these regulations shall prohibit any Informant who believes that he or she has been subject to retaliation or victimisation by his or her employer, from approaching the competent court or tribunal for appropriate relief.
7I (3) Notwithstanding anything contained in sub-regulation (2), any employer who violates this Chapter may be liable for penalty, debarment, suspension, and/or criminal prosecution by the Board , as the case may be: Provided that nothing in these regulations will require the Board to direct re-instatement or compensation by an employer.
7J (1) Any term in an agreement (oral or written) or Code of Conduct, is void in so far as it purports to preclude any person, other than an advocate, from submitting to the Board information relating to the violation of the securities laws that has occurred, is occurring or has a reasonable belief that it would occur.
7J (2) No person shall by way of any threat or act impede an individual from communicating with the Board, including enforcing or threatening to enforce, a confidentiality agreement (other than agreements related to legal representations of a client and communications there under) with respect to such communications. Information Disclosure Form filed with the Board or to seek its prior permission or consent or guidance of any person engaged by the employer before or after such filing .
7K (1) Nothing in these regulations shall be deemed to provide any amnesty or immunity to an Informant for violation of securities law.
7K (2) Where an action against an Informant is deemed appropriate the Board may take into account the co-operation rendered in the final determination of any penalty, sanction, direction or settlement thereof, as the case may be.
7K (3) Where an action against an Informant is deemed appropriate, the Board while determining the value of monetary sanctions shall not take into account the monetary sanctions that the Informant is ordered to pay or that which any other person is ordered to pay if the liability of such other person is based substantially on the conduct that the Informant directed, planned, orinitiated.
7K (4) An Informant who may be liable for enforcement action by the Board based on his or her conduct in connection with securities laws violations reported in the Voluntary Information Disclosure Form filed with the Board, may simultaneously or at any time thereafter file an application seeking settlement with confidentiality under Chapter IX of the Securities and Exchange Board of India (Settlement Proceedings) Regulations, 2018.
7K (5) Notwithstanding any action taken by the Board against an Informant, the Informant may,
7L (1) The Informant Incentive Committee shall be assisted by the Office of Informant Protection.
7L (2) The Informant Incentive Committee shall give its recommendations to the Board on the following matters,-i. Eligibility of Informant for reward;ii. Determination under regulations 7E and 7G; andiii. Such other issues relating to Informant as the Board may require from time to time.
7L (3) The Informant Incentive Committee shall conduct its meetings in the manner specified by the
7M (1) The Board shall upload on its website the following,-i. Annual report of the Office of Informant Protection;ii. Press release informing the public that an intimation to the Informant has been issuedunder Regulation 7D;iii. Press release informing the public that a Reward has been paid under theseregulations and the amount of Monetary Sanctions recovered pursuant to theinformation provided by the Informant;iv. The Order issuing the Reward;
8 (1)The board of directors of every company, whose securities are listed on a stockexchange, shall formulate and publish on its official website, a code of practices and proceduresfor fair disclosure of unpublished price sensitive information that it would follow in order toadhere to each of the principles set out in Schedule A to these regulations, without diluting theprovisions of these regulations in any manner.This provision intends to require every company whose securities are listed onstock exchanges to formulate a stated framework and policy for fair disclosure of events andoccurrences that could impact price discovery in the market for its securities. Principles such as,equality of access to information, publication of policies such as those on dividend, inorganicgrowth pursuits, calls and meetings with analysts, publication of transcripts of such calls andmeetings, and the like are set out in the schedule.
8 (2)Every such code of practices and procedures for fair disclosure of unpublished pricesensitive information and every amendment thereto shall be promptly intimated to the stockexchanges where the securities are listed.This provision is aimed at requiring transparent disclosure of the policyformulated in sub-regulation (1).
9 (1)The board of directors of every listed company and 29[the board of directors orhead(s) of the organisation of every intermediary shall ensure that the chief executive officer ormanaging director] shall formulate a code of conduct 30[with their approval] to regulate, monitorand report trading by its 31[designated persons and immediate relatives of designated persons]towards achieving compliance with these regulations , adopting the minimum standards set out inSchedule B 32[(in case of a listed company) and Schedule C (in case of an intermediary )] to these regulations , without diluting the provisions of these regulations in any manner.would be required to formulate a code of conduct to regulate, monitor and report trading by theirdesignated persons, by adopting the minimum standards set out in Schedule B with respect totrading in their own securities and in Schedule C with respect to trading in other securities.]It is intended that every company whose securities are listed on stock exchangesand every 34[ intermediary ] registered with SEBI is mandatorily required to formulate a code ofconduct governing trading by 35[designated persons and their immediate relatives]. Thestandards set out in the 36[schedules] are required to be addressed by such code of conduct.Insider Trading) (Amendment) Regulations, 2018 2018 (Prohibition of Insider Trading) (Amendment) Regulations, 2018 2018 2018 Insider Trading) (Amendment) Regulations, 2018 Trading) (Amendment) Regulations, 2018 (Amendment) Regulations, 2018 (2)37[The board of directors or head(s) of the organisation, of every other person who isrequired to handle unpublished price sensitive information in the course of business operationsshall formulate a code of conduct to regulate, monitor and report trading by their designatedpersons and immediate relative of designated persons towards achieving compliance with these regulations , adopting the minimum standards set out in Schedule C to these regulations , withoutdiluting the provisions of these regulations in any manner.insolvency professional entities, consultants, banks etc., assisting or advising listed companiesshall be collectively referred to as fiduciaries for the purpose of these regulations .]intermediaries that are required to handle unpublished price sensitive information to formulate acode of conduct governing trading in securities by their designated persons. These entitiesinclude professional firms such as auditors, accountancy firms, law firms, analysts, insolvencyprofessional entities, consultants, banks etc., assisting or advising listed companies. Even entitiesthat normally operate outside the capital market may handle unpublished price sensitiveinformation. This provision would mandate all of them to formulate a code of conduct.]37 Substituted by Securities and Exchange Board of India (Prohibition of Insider Trading) (Amendment)Regulations, 2018 . Prior to substitution Sub-regulation (2) read as under: Every other person who is required to handle unpublished price sensitive information in the course of businessoperations shall formulate a code of conduct to regulate, monitor and report trading by employees and otherconnected persons towards achieving compliance with these regulations , adopting the minimum standards set out inSchedule B to these regulations , without diluting the provisions of these regulations in any manner. 38 Substituted by Securities and Exchange Board of India (Prohibition of Insider Trading) (Amendment)Regulations, 2018 . Prior to substitution the Note read as under: This provision is intended to mandate persons other than listed companies and market intermediaries that arerequired to handle unpublished price sensitive information to formulate a code of conduct governing trading insecurities by their employees. These entities include professional firms such as auditors, accountancy firms, lawfirms, analysts, consultants etc., assisting or advising listed companies, market intermediaries and other capitalmarket participants. Even entities that normally operate outside the capital market may handle unpublished pricesensitive information. This provision would mandate all of them to formulate a code of conduct. (3)Every listed company, 39[ intermediary ] and other persons formulating a code of conductshall identify and designate a compliance officer to administer the code of conduct and otherrequirements under these regulations .responsibility to administer the code of conduct and monitor compliance with these regulations .
9 (4) For the purpose of sub regulation (1) and (2), the board of directors or such otheranalogous authority shall in consultation with the compliance officer specify the designatedpersons to be covered by the code of conduct on the basis of their role and function in theorganisation and the access that such role and function would provide to unpublished pricesensitive information in addition to seniority and professional designation and shall include:-(i) Employees of such listed company, intermediary or fiduciary designated on the basisof their functional role or access to unpublished price sensitive information in theorganization by their board of directors or analogous body;(ii) Employees of material subsidiaries of such listed companies designated on the basisof their functional role or access to unpublished price sensitive information in theorganization by their board of directors;(iii) All promoters of listed companies and promoters who are individuals or investmentcompanies for intermediaries or fiduciaries;(iv) Chief Executive Officer and employees upto two levels below Chief ExecutiveOfficer of such listed company, intermediary , fiduciary and its material subsidiariesirrespective of their functional role in the company or ability to have access tounpublished price sensitive information;Insider Trading) (Amendment) Regulations, 2018 2018 (v) Any support staff of listed company, intermediary or fiduciary such as IT staff orsecretarial staff who have access to unpublished price sensitive information.]
9A (1) 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.
9A (2) The internal controls shall include the following:(a).all employees who have access to unpublished price sensitive information areidentified as designated 42[person];(b).all the unpublished price sensitive information shall be identified and itsconfidentiality shall be maintained as per the requirements of these regulations;(c).adequate restrictions shall be placed on communication or procurement ofunpublished price sensitive information as required by these regulations;(d).lists of all employees and other persons with whom unpublished price sensitiveinformation is shared shall be maintained and confidentiality agreements shall besigned or notice shall be served to all such employees and persons;(e).all other relevant requirements specified under these regulations shall be compliedwith;(f).periodic process review to evaluate effectiveness of such internal controls .2018 (Second Amendment) Regulations, 2019
9A (3) 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 regulation 9 and sub-regulations (1) and (2) of this regulation.
9A (4) 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 operatingeffectively.
9A (5) Every listed company shall formulate written policies and procedures for inquiry in case of leak of unpublished price sensitive information or suspected leak of unpublished price sensitive information, 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.
9A (6) 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.
9A (7) 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
10 Any contravention of these regulations shall be dealt with by the Board in accordance with the Act.
11 11. (1) In order to remove any difficulties in the interpretation or application of the provisions of these regulations, the Board shall have the power to issue directions through guidance notes or circulars: Provided that where any direction is issued by the Board in a specific case relating to interpretation or application of any provision of these regulations, it shall be done only after affording a reasonable opportunity of being heard to the concerned persons and after recording reasons for the direction.]
11 (2) For the purpose of Chapter IIIA, the Board may,-i.by circular, specify procedures and processes for carrying out the purposes of theseregulations;ii.remove any difficulty in the interpretation or application or implementation of theprovisions of these regulations, by issuing clarifications and specifying proceduresthrough circulars or guidelines.]
12 (1)The Securities and Exchange Board of India (Prohibition of Insider Trading)Regulations, 1992 are hereby repealed.
12 (2) Notwithstanding such repeal, 43 Renumbered as 11 (1) by Securities and Exchange Board of India (Prohibition of Insider Trading) (ThirdAmendment) Regulations, 2019 Regulations, 2019 (a)the previous operation of the repealed regulations or anything duly done or sufferedthereunder, any right, privilege, obligation or liability acquired, accrued or incurred under therepealed regulations, any penalty, forfeiture or punishment incurred in respect of any offencecommitted against the repealed regulations, or any investigation, legal proceeding or remedy inrespect of any such right, privilege, obligation, liability, penalty, forfeiture or punishment asaforesaid, shall remain unaffected as if the repealed regulations had never been repealed; and(b)anything done or any action taken or purported to have been done or taken including anyadjudication, enquiry or investigation commenced or show-cause notice issued under therepealed regulations prior to such repeal, shall be deemed to have been done or taken under thecorresponding provisions of these regulations;(3) After the repeal of Securities and Exchange Board of India (Prohibition of InsiderTrading) Regulations, 1992, any reference thereto in any other regulations made, guidelines or