Amendment to SEBI (Prohibition of Insider Trading) Regulations, 2015 as per notification – 17th July, 2020

SEBI has issued a notification dated 17th July, 2020 on Amendment to SEBI (Prohibition of Insider Trading) Regulations, 2015 effective from aforesaid date. We give below a summary of the major amendments, for your information:

I. Structured Digital Database (SDD)

Regulation 3 (5) (Communication or procurement of unpublished price sensitive information)  has been substituted.

Before Amendment After Amendment
The Board of Directors were mandatorily required to maintain SDD The Board of Directors can assign responsibility of maintaining SDD to Head(s) of the organisation of every person required to handle unpublished price sensitive information (UPSI)
SDD required name of person with whom information is shared and sent, detail of  PAN or other Identity proof of such person Now, additionally nature of UPSI and name of person who shared UPSI is also required to be added in SDD
SDD could be outsourced Now, there is a prohibition for outsourcing the work relating to maintaining SDD. It shall be maintained internally.

II. Period of maintaining SDD

In Regulation 3, sub-regulation 6 has been inserted.

Before Amendment After Amendment
There was no time limit mentioned for preserving SDD Now, it is compulsory to preserve information of SDD for minimum 8 years after completion of relevant transaction
  If there is any investigation by SEBI, SDD information is required to be maintained or preserved till completion of investigation or proceedings of SEBI

III.   Amendments to Schedule B (Minimum Standard for Code of Conduct for Listed Companies  to Regulate, Monitor and Report Trading by Designated Person)

Clauses of schedule B Before Amendment After Amendment
4 (3)(b) ————– Trading window restrictions will not be applicable to transactions which are undertaken through such other mechanism as may be specified by the Board from time to time
12 No such requirement Now, it is compulsory for the company to transfer funds/ penalty collected from any disciplinary action to be remitted to SEBI for transferring to IPEF*
13 On violation of PIT Regulations, Company was immediately required to inform SEBI. Now, on violation of  PIT Regulations, Company is required to immediately inform Stock exchanges.

IV. Amendments to Schedule C (Minimum Standards for Code of Conduct for Intermediaries and Fiduciaries to Regulate, Monitor and Report Trading by Designated Persons)

Clauses of schedule C Before Amendment After Amendment
10 No such requirement Now, fine /penalty for contravention of code of conduct shall be remitted to SEBI for crediting to IPEF*
11 On violation of PIT Regulations, intermediary or fiduciary was immediately required to inform SEBI. Now, on violation of PIT Regulations, intermediary or fiduciary is required to immediately inform Stock exchanges.

*IPEF- Investors Protection & Education Fund established by SEBI.

In furtherance to the aforesaid matter SEBI has issued a circular dated 23rd July, 2020 providing format of intimation to stock exchange and account details for transferring funds to SEBI.

(Author can be reached at Email ID: csamisheth@gmail.com)

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Name: Ami Sheth
Qualification: CS
Company: A. M. Sheth & Associates, Practising Company Secretaries
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