SECURITIES AND EXCHANGE BOARD OF INDIA
(1 [PROHIBITION OF] INSIDER TRADING)
REGULATIONS, 1992
In exercise of the powers conferred by section 30 of the Securities and Exchange Board of India Act, 1992 (15 of 1992), the Board with the previous approval of the Central Government, hereby makes the following regulations, namely :—
CHAPTER I
PRELIMINARY
Short title and commencement.
1. (1) These regulations may be called the Securities and Exchange Board of India (2[Prohibition of] Insider Trading) Regulations, 1992.
(2) These regulations shall come into force on the date of their publication in the Official 3Gazette.
Definitions.
2. In these regulations, unless the context otherwise requires :—
(a) “Act” means the Securities and Exchange Board of India Act, 1992 (15 of 1992);
(b) “body corporate” means a body corporate as defined in section 2 of the Companies Act, 1956 (1 of 1956) ;
(c) “connected person” means any person who—
(i) is a director, as defined in clause (13) of section 2 of the Companies Act, 1956 (1 of 1956), of a company, or is deemed to be a director of that company by virtue of sub-clause (10) of section 307 of that Act or
(ii) occupies the position as an officer or an employee of the company or holds a position involving a professional or business relationship between himself and the company 4[whether temporary or permanent] and who may reasonably be expected to have an access to unpublished price sensitive information in relation to that company:
5[Explanation :—For the purpose of clause (c), the words “connected person” shall 6[mean] any person who is a connected person six months prior to an act of insider trading;]
(d) “dealing in securities” means an act of 7[subscribing,] buying, selling or agreeing to 8[subscribe,] buy, sell or deal in any securities by any person either as principal or agent;
1 Inserted by the SEBI (Insider Trading) (Amendment) Regulations, 2002,w.e.f. 20-02-2002.
2 Inserted by the SEBI (Insider Trading) (Amendment) Regulations, 2002,w.e.f. 20-02-2002.
3 19-11-1992.
4 Inserted by the SEBI (Trading) (Amendment) Regulations, 2002,w.e.f. 20-02-2002.
5 Inserted by the SEBI (Trading) (Amendment) Regulations, 2002, w.e.f. 20-02-2002.
6 Substituted for “include” by the SEBI (Prohibition of Insider Trading) (Second Amendment) Regulations, 29-11-2002.
7 Inserted by the SEBI (Insider Trading) (Amendment) Regulations, 2002, w.e.f. 20-2-2002.
8 Inserted by the SEBI (Insider Trading) (Amendment) Regulations, 2002, w.e.f. 20-2-2002.
9[(e) “insider” means any person who,
(i) is or was connected with the company or is deemed to have been connected with the company and is reasonably expected to have access 10[***] to unpublished price sensitive information in respect of securities of 11[a] company, or
(ii) has received or has had access to such unpublished price sensitive information ;]
(f) “investigating authority” means any officer of the Board or any other person, not being a firm, body corporate or an association of persons, having experience in dealing with the problems relating to the securities market and who is authorised by the Board under Chapter III ;
(g) “officer of a company” means any person as defined in clause (30) of section 2 of the Companies Act, 1956 (1 of 1956) including an auditor of the company;
(h) “person is deemed to be a connected person”, if such person—
(i) is a company under the same management or group, or any subsidiary company thereof within the meaning of sub-section (1B) of section 370, or sub-section (11) of section 372, of the Companies Act, 1956 (1 of 1956) or sub-clause (g) of section 2 of the Monopolies and Restrictive Trade Practices Act, 1969 (54 of 1969) as the case may be; or
12 [(ii) is an intermediary as specified in section 12 of the Act, Investment company, Trustee Company, Asset Management Company or an employee or director thereof or an official of a stock exchange or of clearing house or corporation;]
(iii) is a merchant banker, share transfer agent, registrar to an issue, debenture trustee, broker, portfolio manager, Investment Advisor, sub-broker, Investment Company or an employee thereof, or is member of the Board of Trustees of a mutual fund or a member of the Board of Directors of the Asset Management Company of a mutual fund or is an employee thereof who have a fiduciary relationship with the company;
(iv) is a Member of the Board of Directors or an employee of a public financial institution as defined in section 4A of the Companies Act, 1956; or
(v) is an official or an employee of a Self-regulatory Organisation recognised or authorised by the Board of a regulatory body; or
(vi) is a relative of any of the aforementioned persons; (vii) is a banker of the company.
13 [(viii) relatives of the connected person; or
14 [(ix) is a concern, firm, trust, Hindu undivided family, company or association of persons wherein any of the connected persons mentioned in sub-clause (i) of clause (c), of this
9 Inserted by the SEBI (Prohibition of Insider Trading) (Amendment) Regulations, 2008 w.e.f. 19-11-2008.
10 The words “by virtue of such connection,” omitted by the SEBI Insider Trading) (Amendment) Regulations, 2002, w.e.f. 20-2-2002.
11 Substituted for the word “the” by the Insider Trading) (Amendment) Regulations, 2002, w.e.f. 20-2-2002.
12 Substituted by the SEBI (Insider Trading) (Amendment) Regulations, 2002, w.e.f. 20-2-2002. Prior to its substitution, sub-clause (ii) read as under:-
“is an official or a member of a stock exchange or of a clearing house of that stock exchange, or a dealer in securities within the meaning of clause (c) of section 2 , and section 17 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956), respectively, or any employee or such member or dealer of a stock exchange.”
13 Inserted by the SEBI (Insider Trading) (Amendment) Regulations, 2002, w.e.f. 20-2-2002.
regulation or any of the persons mentioned in sub-clause (vi), (vii) or (viii) of this clause have more than 10 per cent of the holding or interest;]]
15 [(ha) “price sensitive information” means any information which relates directly or indirectly to a company and which if published is likely to materially affect the price of securities of company.
Explanation.—The following shall be deemed to be price sensitive information :—
(i) periodical financial results of the company;
(ii) intended declaration of dividends (both interim and final);
(iii) issue of securities or buy-back of securities;
(iv) any major expansion plans or execution of new projects.
(v) amalgamation, mergers or takeovers;
(vi) disposal of the whole or substantial part of the undertaking;
(vii) and significant changes in policies, plans or operations of the company;]
(i) “relative” means a person, as defined in section 6 of the Companies Act, 1956 (1 of 1956);
(j) “stock exchange” means a stock exchange which is recognised by the Central Government 16[or Securities and Exchange Board of India] under section 4 of Securities Contracts (Regulation) Act, 1956 (42 of 1956);
17 [(k) “unpublished” means information which is not published by the company or its agents and is not specific in nature.
Explanation.—Speculative reports in print or electronic media shall not be considered as published information.]
18[(l) “working day” shall mean the working day when the regular trading is permitted on the concerned stock exchange where the securities of the company are listed]
14 Substituted by the SEBI (Prohibition of Insider Trading) (Second Amendment) Regulations, 29-11-2002. Earlier it was inserted by the SEBI (Insider Trading) (Amendment) Regulations, 2002, w.e.f. 20-02-2002. Prior to its substitution, sub-clause (ix) read as under:-
“a concern, firm, trust, Hindu undivided family, company, association of persons wherein the relatives of persons mentioned in sub-clauses (vi) , (vii) and (viii) has more than 10 per cent of the holding or interest. ”
15 Inserted by the SEBI (Insider Trading) (Amendment) Regulations, 2002, w.e.f. 20-2-2002.
16 Inserted by the SEBI (Insider Trading) (Amendment) Regulations, 2002, w.e.f. 20-2-2002.
17 Substituted by the SEBI (Insider Trading) (Amendment) Regulations, 2002, w.e.f. 20-2-2002. Prior to its substitution, clause (k) read as under:-
“(k) Unpublished price sensitive information means any information which related to the following matters or is of concern, directly or indirectly, to a company, and is not generally known or published by such company” for general information , but which if published or known, is likely to materially affect the price of securities of that company in the market –
(i) financial results (both half-yearly and annual) of the company;
(ii) intended declaration of dividend (both interim/final);
(iii) issue of shares by way of public rights, bonus etc.;
(iv) any major expansion plans or execution of new projects;
(v) amalgamations, mergers and takeovers;
(vi) disposal of the whole or substantially the whole of the undertaking;
(vii) such other information as may affect the earnings of the company.
18 Inserted by the SEBI (Prohibition of Insider Trading) (Amendment) Regulations, 2008 w.e.f. 19-11-2008.
CHAPTER II
PROHIBITION ON DEALING, COMMUNICATING OR COUNSELLING
Prohibition on dealing, communicating or counselling on matters relating to insider trading. 3. No insider shall—
(i) either on his own behalf or on behalf of any other person, deal in securities of a company listed on any stock exchange 19[when in possession of] any unpublished price sensitive information; or
20 [(ii) communicate 21 [or] counsel or procure directly or indirectly any unpublished price sensitive information to any person who while in possession of such unpublished price sensitive information shall not deal in securities :
Provided that nothing contained above shall be applicable to any communication required in the ordinary course of business 22[or profession or employment] or under any law.]
23 [***]
24 [3A. No company shall deal in the securities of another company or associate of that other company while in possession of any unpublished price sensitive information.]
25 [Regulation 3A not to apply in certain cases.
3B. (1) In a proceeding against a company in respect of regulation 3A, it shall be a defence to prove that it entered into a transaction in the securities of a listed company when the unpublished price sensitive information was in the possession of an officer or employee of the company, if :
(a) the decision to enter into the transaction or agreement was taken on its behalf by a person or persons other than that officer or employee; and
(b) such company has put in place such systems and procedures which demarcate the activities of the company in such a way that the person who enters into transaction in securities on behalf of the company cannot have access to information which is in possession of other officer or employee of the company; and
19 Substituted for “on the basis of” by the SEBI (Insider Trading) (Amendment) Regulations, 2002, w.e.f. 20-02-2002.
20 Substituted by the SEBI (Insider Trading) (Amendment) Regulations, 2002, w.e.f. 20-02-2002. Prior to its substitution clause (ii) read as under:-
“(ii) communicate any unpublished price sensitive information to any person, with or without his request for such information, except as required in the ordinary course of business or under any law; or”
21 Inserted by the SEBI (Prohibition of Insider Trading) (Amendment) Regulations, 2008 w.e.f. 19-11-2008.
22 Inserted by the SEBI (Prohibition of Insider Trading) (Second Amendment) Regulations, 2002, w.e.f. 29-11-2002.
23 Omitted by t the SEBI (Insider Trading) (Amendment) Regulations, 2002, w.e.f. 20-2-2002. Prior to its omission clause (iii) read as under:-
“(iii) counsel or procure any other person to deal in securities of any company on the basis of unpublished price sensitive information.”
24 Inserted by the SEBI (Insider Trading) (Amendment) Regulations, 2002 w.e.f. 20-02-2002.
25 Inserted by the SEBI (Prohibition of Insider Trading) (Second Amendment) Regulations, 2002 w.e.f. 29-11-2002.
(c) it had in operation at that time, arrangements that could reasonably be expected to ensure that the information was not communicated to the person or persons who made the decision and that no advice with respect to the transactions or agreement was given to that person or any of those persons by that officer or employee; and
(d) the information was not so communicated and no such advice was so given.
(2) In a proceeding against a company in respect of regulation 3A which is in possession of unpublished price sensitive information, it shall be defence to prove that acquisition of shares of a listed company was as per the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997.]
Violation of provisions relating to insider trading.
4. Any insider who deals in securities 26[***] in contravention of the provisions of regulation 3 27[or 3A] shall be guilty of insider trading.
