Securities and Exchange Board of India has again amended the Prohibition of Insider Trading, Regulations 2020 issuing the circular on 17 July 2020. Read – SEBI (Prohibition of Insider Trading) (Amendment) Regulations, 2020

The Main Amendments are in relation of Digital Structure Database, Marinating of Records of UPSI, Transfer of amounts in Investor Education and Protection Funds etc.

Following is the table comparing and defining the existing and amended/inserted provisions of the regulation.

Sl. No. Amendment as per Regulation Current Provision as per Regulation Amendment in brief
1 Sub-regulation 5, shall be substituted with the following, namely-

“(5) The board of directors or head(s) of the organisation of every person required to handle unpublished price sensitive information shall ensure that a structured digital database is maintained containing the nature of unpublished price sensitive information and the names of such persons who have shared the information and also the names of such persons with whom information is shared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 database shall not be outsourced and shall be maintained internally with adequate internal controls and checks such as time stamping and audit trails to ensure non-tampering of the database.”

ii. after sub-regulation 5, the following shall be inserted, namely, –

“(6) The board of directors or head(s) of the organisation of every person required to handle unpublished price sensitive information shall ensure that the structured digital database is preserved for a period of not less than eight years after completion of the relevant transactions and in the event of receipt of any information from the Board regarding any investigation or enforcement proceedings, the relevant information in the structured digital database shall be preserved till the completion of such proceedings.”

(5) The board of directors shall ensure that a structured digital database is maintained containing the names of such persons or entities as the case may be with whom information 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. Now,

  • Head(s) of the organisation of every person required to handle unpublished price sensitive information not only Board of Directors.
  • Nature of unpublished price sensitive information and the names of such persons who have shared the information is also required to be maintained in Digital Structure Database.
  • Such database shall not be outsourced. Earlier there was no clarity or restriction for outsourcing of maintaining Database.
  • Structured digital database is required to be preserved for a period of not less than eight years after completion of the relevant transactions and in the event of receipt of any information from the Board regarding any investigation or enforcement proceedings, the relevant information in the structured digital database shall be preserved till the completion of such proceedings.” Newly inserted.
2 In regulation 7, in sub-regulation 2, after clause (b), the following shall be inserted, namely, ─

“(c) The above disclosures shall be made in such form and such manner as may be specified by the Board

from time to time.”

(7) (2) (b) Every company shall notify the particulars of such trading to the stock exchange on which the securities are listed within two trading days of receipt of the disclosure or from becoming aware of such information. Now,

  • Disclosures shall be made in such form and such manner as may be specified by the Board from time to time.
3 in Schedule B,

i. in clause 4, sub-clause 3 (b), after the words “delisting offer”, the words “or transactions which are undertaken through such other mechanism as may be specified by the Board from time to time” shall be inserted.

3 (b) transactions which are undertaken in accordance with respective regulations made by the Board such as acquisition by conversion of warrants or debentures, subscribing to rights issue, further public issue, preferential allotment or tendering of shares in a buy-back offer, open offer, delisting offer. Now,

  • Those transactions are also included which are undertaken through such other mechanism as may be specified by the Board from time to time.
4 In Schedule B

clause 12 shall be substituted with the following, namely-

“Without prejudice to the power of the Board under the Act, the code of conduct shall

stipulate the sanctions and disciplinary actions, including wage freeze, suspension,

recovery, etc., that may be imposed, by the listed company required to formulate a code of

conduct under sub-regulation (1) of regulation 9, for the contravention of the code of conduct. Any amount collected under this clause shall be remitted to the Board for credit to the Investor Protection and Education Fund administered by the Board under the Act.”

Clause 12

Without prejudice to the power of the Board under the Act, the code of conduct shall stipulate the sanctions and disciplinary actions, including wage freeze, suspension, [recovery, clawback] etc., that may be imposed, by the [listed company] required to formulate a code of conduct under sub-regulation (1) of regulation 9, for the contravention of the code of conduct.

Now,

  • Any amount collected under clause 12 shall be remitted to the Board for credit to the Investor Protection and Education Fund administered by the Board under the Act.
5 In Schedule B

in clause 13, the words “inform the Board promptly” shall be replaced by the words “promptly inform the stock exchange(s) where the concerned securities are traded, in such form and such manner as may be specified by the Board from time to time”.

Clause 13

The code of conduct shall specify that in case it is observed by the [listed company] required to formulate a code of conduct under sub-regulation (1) of regulation 9, that there has been a violation of these regulations, [it] shall inform the Board promptly.

Now,

  • Instead of informing Board, it is required to inform the Stock Exchange, promptly.
6 In Schedule C,

clause 10 shall be substituted with the following, namely

“Without prejudice to the power of the Board under the Act, the code of conduct shall stipulate the sanctions and disciplinary actions, including wage freeze, suspension, recovery, etc., that may be imposed, by the intermediary or fiduciary required to formulate a code of conduct under sub-regulation (1) and sub-regulation (2) of

regulation 9, for the contravention of the code of conduct. Any amount collected under this clause shall be remitted to the Board for credit to the Investor Protection and Education Fund administered by the Board under the Act.”

Clause 10

Without prejudice to the power of the Board under the Act, the code of conduct shall stipulate the sanctions and disciplinary actions, including wage freeze, suspension, recovery, clawback etc., that may be imposed, by the intermediary or fiduciary required to formulate a code of conduct under sub-regulation (1) and sub-regulation (2) of regulation 9, for the contravention of the code of conduct.

Now,

  • Any amount collected under clause 10 shall be remitted to the Board for credit to the Investor Protection and Education Fund administered by the Board under the Act.
7 In Schedule C

in clause 11, the words “inform the Board promptly” shall be replaced by the words “promptly inform the stock exchange(s) where the concerned securities are traded, in such form and such manner as may be specified by the Board from time to time”.

Clause 11

The code of conduct shall specify that in case it is observed by the intermediary or fiduciary required to formulate a code of conduct under sub-regulation (1) or sub-regulation (2) of regulation 9, respectively, that there has been a violation of these regulations, such intermediary or fiduciary shall inform the Board promptly.

Now,

  • Instead of informing Board, it is required to inform the Stock Exchange, promptly.
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