SEBI (Prohibition of Insider Trading) Regulations, 2015 has replaced more than two decades old Insider Trading

Regulations of 1992.

Key Highlights Initial and Continual Disclosures continued. Introduced:Concept of Trading Plans.New Definitions : Compliance Officer, Generally Available Information, Immediate Relatives, Promoters, TradingDisclosures requirement extended to Connected Person.Trading includes dealing and pledging of securitiesInsider includes Connected PersonOnus of Proof now on the Connected PersonPrinciple and Code of Fair Disclosure of UPSI provided in Schedule AMinimum Standards for Code of Conduct by Insiders provided in Schedule B with the modified concept of Trading WindowDiscretionary Power and Responsibility casted on the Compliance Officer

Effective Date

120 days from the date of publication in Official Gazette i.e. 15.05.2015

15.01.2015 120 days 15.05.2015

Important DefinitionsWords Defined Meaning

Compliance Officer: •Senior Officer to be designated - reporting to the-BOD or Head of Organizations (if no Board).

• Financially literate & understand legal & compliance needs.

Responsibilities:• Compliance of policies & procedures• Maintenance of Records• Monitoring adherence to rules for preserving UPSI• Monitoring Trades & Implementation of code specified in

these regulations

Important Definitions (Contd…..)Words Defined Meaning

Connected Person: Any person, who is/has during past 6 months of concerned action) :

•Is associated with the Company (Directly or Indirectly)by reason as prescribed; or•Has access to UPSI (Directly or Indirectly) or Is expected to have been allowed such access.

Important Definitions (Contd…..)Words Defined MeaningPersons deemed to be Connected:

•Immediate Relatives of Connected Person-Specified above•Holding or Associate or Subsidiary Company •Intermediary (as per Section 12 of the Act) or Director or Employee•Officials of Stock Exchange, Clearing House, Corporations•A Members of – Board of Trustees of Mutual Fund, Board of Directors of Asset Management Company or an employee thereof•Member of BOD or employee of PFI (Public Financial Institution)•An Official or Employee of Self Regulatory Organizations-recognized or authorized by Board.•Banker of the Company •Any Concern/Firm/Trust/HUF/Company/AOP-where Director/Immediate Relative/Banker-has more than 10% holding of interest.

Important Definitions (Contd…..)Words Defined MeaningGenerally Available Information:

Information that is accessible to Public without any discrimination.

Immediate Relative: •Spouse•Parent , Sibling , Child of the Person or his SpouseAny of whom is either dependent financially on such person or consults such person for decisions relating to securities.

Insider: Any Person who is Connected Person or In possessions of or having UPSI

Trading: Means Subscribing/ Buying/Selling/Dealing or agreeing to-in any securities and shall be construed accordingly

Important DefinitionsWords Defined MeaningUnpublished Price Sensitive Information:

Any information relating to –Company or its Securities (Directly or Indirectly)-which is not Generally available and which on becoming generally available will materially affect the price of the securities including but not restricted to:-Financial ResultsDividendsChange in Capital StructureMergers, De-mergers, Acquisitions, De-listing etc.Changes in KMPMaterial events in accordance with the Listing Agreement

Words / Expressions used and not defined to mean as defined under the SEBI Act 1992, Securities Contract (Regulation) Act, 1956, Depositories Act, 1996 or Companies Act, 2013.

Regulation 3: Communication or Procurement of UPSI: (contd….)Insider not to Communicate / Provide / Allow access to UPSI (relating to Company or its Securities) to any person (including another Insider) except:• For Legitimate Purpose• Performance of Duties• Discharge of Legal Obligations

No person must obtain or cause the communication of UPSI, except:

• For Legitimate Purpose• Performance of Duties• Discharge of Legal Obligations

Regulation 3: Communication or Procurement of UPSI:

UPSI may be communicated, provided, allowed access to or procured, for transactions that would:

Entail an obligation to make an Open Offer

Not attract an obligation to make Open Offer & the

BOD has an informed opinion that the proposed transaction is in the Best Interest of the Company

and the UPSI is to be made Generally Available at least 2 days prior to the

proposed transaction

For the Purpose of the Above the Board may

require parties to execute a

Confidentiality & Non-disclosure

Contracts.

Regulation 4: Trading when in possession of UPSI:

No Insider to trade in securities that are listed or proposed to be listed on a stock exchange when in possession of UPSI.

For Individuals: that the transaction is an Off Market inter-se transfer between

promoters-in possession of UPSI & without the breach of Regulation 3

For Non-Individuals: Individuals who took the decision to trade were not in possession of UPSI and are different

from individuals who are in possession of UPSI

Appropriate and adequate arrangements to ensure that regulations are not

violatedTrades were as per the trading plans

under Regulation 5.

Proof of Innocence may be:-

Regulation 4: Trading when in possession of UPSI: Onus of Proof

Onus of proving that they were not in possession of UPSI:

SEBI to specify standard & requirements for this regulations from time to time.

In case of Connected Person:

On such PersonIn other cases: On

SEBI

Regulation 5: Trading Plans: (Contd…..)

Insider to formulate a trading plan and present the same to the Compliance Officer for his approval and Public Disclosure.Such Trading Plan shall:-

Not entail commencement of trading –earlier than 6 months from the disclosure of the plan.Not entail trading between the 20th day prior to the last day of any Financial Period & 2nd day after the disclosure of Financial Results.Entail trading for a period of not less than 12 monthsNot overlap any period for which another plan is already in existenceSet out the Value of Trade, Number of Securities to be traded along with the Nature of Trade & Interval at which such trade be effected.Not trade in Securities form Market Abuse

Regulation 5: Trading Plans:

The Compliance Officer must review the trading plan to access whetherthere is any violation and may seek undertaking if required.

Trading Plan once approved is irrevocable; insider have to implement thesame.

(Trading plan to commence only when UPSI becomes a Generally Available Information-Trading plan to be deferred until then.)

Upon approval of the trading plan the Compliance Officer to Notify theStock Exchange.

Regulation 6: General Provisions:

Disclosure by a person to include those relating to trading:

• Of his immediate relatives;• Of person on whose behalf this person is taking decisions

Trading in Securities to include Trading in Derivatives(if trading permitted be law in force).

Disclosure to be maintained –by the Company-for minimum 5 years form the date of disclosure.

Regulation 7: Disclosure by certain persons:

By a Promoter, KMP & Director-to disclose his holding of securities of the Company; to the Company within 30 days of this regulation taking effect in Form A.

On Appointment or on becoming: KMP / Director / Promoter-to disclose his holding in the Company as on the date of appointment within 7 days in Form B.

Initial Disclosures

Regulation 7: Disclosure by certain persons: (Contd…..)

Continual Disclosures:

Company to disclose to Stock Exchange: within 2 days of receipt of disclosure or becoming aware of such situation

By every Promoter / Director / Employee-of the Number of

Securities acquired / disposed off-within 2 trading days in Form C-if:

The Value in 1 transactions or series of transactions over any calendar

quarter exceeds Rupees 10 lakhs or such other value as may be

prescribed.

Regulation 7: Disclosure by certain persons:

Incremental Disclosures: After the prior disclosurecross the threshold specified in 2(a) in Form C.

Disclosure by other Connected Persons: Any Company-at its discretion require- connected or any class ofconnected persons-to make disclosures of its holding ortrading in securities-in Form D & at such frequency-asis determined by the Company.

Regulation 8: Code of Fair Disclosure

The Board of Directors shall formulate & publish on itswebsite a Code of Practice & Procedures for FairDisclosure of UPSI, so as to adhere to the Principles asset out in Schedule A.

Every such Code and any amendment thereto shall bepromptly intimated to the Stock Exchange.

Regulation 9: Code of Conduct:Board of Directors & Market Intermediary shall formulate a Code of Conduct toregulate, monitor and report trading by its employees and other connectedpersons-for achieving compliance & adopting minimum standards set in ScheduleB.

Every other person who is to handle UPSI shall formulate a code of conductaimed towards achieving compliance with the regulations & adopting minimumstandards set in Schedule B.

Every Listed Company, Market Intermediary & other persons who formulate theCode shall designate a Compliance Officer who shall administer the Code and thisRegulations.

Company shall deal only with such market intermediaries / other person who haveformulate the Code of Conduct, as per the regulations.

Every Such Code of Conduct to be intimated to the Stock Exchange immediately

Principle of Fair Disclosure: Schedule A

Prompt public disclosureUniform & Universal dissemination of UPSIDesignation of Senior Officer as a Chief Investor Relations Officer.Prompt dissemination of UPSI that gets disclosed selectively, inadvertently.Appropriate and Fair response to queries on news reportsEnsure Information shares with analyst not UPSITo make record of proceedings of meetings with analystHandling information on need to know basis.

Minimum Standards for Code of Conduct: Schedule B

Compliance Officer to report to the Board of Directors in particular to the Chairman of the Audit Committee.Information should be handled only on need to know basis.Employees and connected person to be governed by the internal code of conduct for dealing in securitiesSpecify designated person to be covered by such code on basis of role & function.

Modified Trading Window: Schedule B“Designated Person” (DP): any Employee or Connected Person who is designated so on the basis of their role.

DP to execute trade in compliance of this regulations

A Notional Trading window to be used to monitor the trading by DPs.

Closure of Trading Window: by the Compliance Officer: when he feels that: DP or Class of DPs are in possession of UPSI

Closure to be only in relation to Securities to which the UPSI related

DP & his relatives not to trade when the Trading Window is closed

Modified Trading Window: Schedule B

Re-opening of the Trading Window: by the Compliance Officer, keeping in mind the fact of UPSI becoming Generally Available and absorption of information by the market

Trading Window to be reopened within 48 hours after the UPSI becomes Generally Available

Window applicable to: persons in Contractual & Fiduciary Relationship; like auditors, accounting firms, law firms, analysts, consultants, etc.

Pre-clearances: Schedule B (Contd….)

Pre-clearances:In Open Trading Window: DP to take Pre-clearances from Compliance Officer; if value of trade more than threshold stipulated by the Board

No application for Pre-clearance to be made when in possession of UPSI-even if Trading Window is Closed

List of Securities as restricted list maintained by Compliance Officer: which is to be the base for approval or rejection of Pre-clearances

Compliance Officer can seek declaration from the DP stating that he is not in possession of UPSI.

Execution Pre-cleared Trades to be within 7 days

Contra Trades not to be executed for the Next 6 months by the DP.

Pre clearance: Schedule B

Compliance officer to have power for reasons to be recorded in writing; to grant relaxation (such relaxation must not violate the regulations)

If a contra trade is executed inadvertently; the profits shall be liable to be disgorged for remittance to the Board for credit to IEPF

Code of conduct to stipulate formats for pre-clearance applications, reporting of trades executed etc.

By Haresh Jani & Associates.Company Secretaries