TaxTMI 
TaxTMI 
Securities and Exchange Board of India (Prohibition of Insider Trading) (Amendment) Regulations, 2018
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.... clause (c), following explanation shall be inserted at the end, namely:- "Explanation-For the purpose of this regulation, "financially literate" shall mean 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." (b) in clause (h), the numbers "2009" shall be substituted with the numbers "2018" (c) after clause (h), following clause shall be inserted, namely:- "(ha) "proposed to be listed" shall include securities of an unlisted company: (i) if such unlisted company has filed offer documents or other documents, as the case may be, with the Board, stock exchange(s) or registrar of companies in connection with the listing; or (ii) if such unlisted company is getting listed pursuant to any merger or amalgamation and has filed a copy of such scheme of merger or amalgamation under the Companies Act, 2013; " (d) in clause (n), sub-clause (vi) shall be omitted. (2) in regulation 3,- (a) after sub-regulation (2), following sub-regulation shall....
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....n is shared under this regulation along with the Permanent Account Number or any other identifier authorized by law where Permanent Account Number is not available. Such databases shall be maintained with adequate internal controls and checks such as time stamping and audit trails to ensure non-tampering of the database." (3) in regulation 4,- (a) in sub-regulation (1), before the proviso, following explanation shall be inserted, namely:- "Explanation- When a person who has traded in securities has been in possession of unpublished price sensitive information, his trades would be presumed to have been motivated by the knowledge and awareness of such information in his possession;" (b) in sub-regulation (1), in proviso, in clause (i), the word "promoters" shall be substituted with the word "insiders" (c) in sub-regulation (1), in proviso, in clause (i), following proviso shall be inserted, namely:- "Provided that such unpublished price sensitive information was not obtained under sub-regulation (3) of regulation 3 of these regulations." (d) in sub-regulation (1), in proviso, in clause (i), after the proviso following proviso s....
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....e the word "towards" the words "employees and other connected persons" shall be substituted with the words "designated persons and immediate relatives of designated persons". (iv) after the word "Schedule B" and before the word "to" the following shall be inserted, namely:- "(in case of a listed company) and Schedule C (in case of a intermediary)" (b) after sub-regulation (1), the following explanation shall be inserted, namely:- "Explanation-For the avoidance of doubt it is clarified that intermediaries, which are listed, would be required to formulate a code of conduct to regulate, monitor and report trading by their designated persons, by adopting the minimum standards set out in Schedule B with respect to trading in their own securities and in Schedule C with respect to trading in other securities." (c) in the Note to sub-regulation (1), (i) the word "market intermediary" shall be substituted with the word "intermediary". (ii) the words "its employees" shall be substituted with the words "designated persons and their immediate relatives" (iii) the word "schedule" shall be substituted with the word "schedule....
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....diary or fiduciary designated on the basis of their functional role or access to unpublished price sensitive information in the organization by their board of directors or analogous body; (ii) Employees of material subsidiaries of such listed companies designated on the basis of their functional role or access to unpublished price sensitive information in the organization by their board of directors; (iii) All promoters of listed companies and promoters who are individuals or investment companies for intermediaries or fiduciaries; (iv) Chief Executive Officer and employees upto two levels below Chief Executive Officer of such listed company, intermediary, fiduciary and its material subsidiaries irrespective of their functional role in the company or ability to have access to unpublished price sensitive information; (v) Any support staff of listed company, intermediary or fiduciary such as IT staff or secretarial staff who have access to unpublished price sensitive information." (7) after regulation 9, a new regulation 9A shall be inserted, namely:- "Institutional Mechanism for Prevention of Insider trading. 9A. (1) The Chief ....
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....of such inquiries. (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. (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 intermediaries and fiduciaries shall co-operate with the listed company in connection with such inquiry conducted by listed company." (8) in SCHEDULE B, (a) in the recital, the words "and sub-regulation (2)" shall be omitted. (b) in the recital, after the word "Conduct" and before the word "to", the words "for Listed Companies" shall be inserted. (c) in the recital, the word "Insiders" shall be substituted with the words "Designated Persons". (d) in clause (1), after the word "directors" and before full stop, the words ", but not less than once in a year" shall be inserted. (e) in clause (2), the words "the insider's" and "his" shall be omitted. (f) in clause (3), the words "Employees and connected persons designate....
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.... (s) in clause (13), the word "they" shall be substituted with the word "it". (t) after clause (13), a new clause (14) shall be inserted, namely:- "14. Designated persons shall be required to disclose names and Permanent Account Number or any other identifier authorized by law of the following persons to the company on an annual basis and as and when the information changes: (a) immediate relatives (b) persons with whom such designated person(s) shares a material financial relationship (c) Phone, mobile and cell numbers which are used by them In addition, the names of educational institutions from which designated persons have graduated and names of their past employers shall also be disclosed on a one time basis. Explanation-The term "material financial relationship" shall mean a relationship in which one person is a recipient of any kind of payment such as by way of a loan or gift during the immediately preceding twelve months, equivalent to at least 25% of such payer's annual income but shall exclude relationships in which the payment is based on arm's length transactions." (u) after clause (14)....
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....ny unpublished price sensitive information. He shall also have regard to whether any such declaration is reasonably capable of being rendered inaccurate. 7. The code of conduct shall specify any reasonable timeframe, which in any event shall not be more than seven trading days, within which trades that have been precleared have to be executed by the designated person, failing which fresh preclearance would be needed for the trades to be executed. 8. The code of conduct shall specify the period, which in any event shall not be less than six months, within which a designated person who is a connected person of the listed company and is permitted to trade in the securities of such listed company, shall not execute a contra trade. The compliance officer may be empowered to grant relaxation from strict application of such restriction for reasons to be recorded in writing provided that such relaxation does not violate these regulations. Should a contra trade be executed, inadvertently or otherwise, in violation of such a restriction, the profits from such trade shall be liable to be disgorged for remittance to the Board for credit to the Investor Protection and Education Fund admin....