In this article, I have jotted down all the compliances triggering to a listed entity pertaining to SEBI (Prohibition of Insider Trading) Regulations, 2015 (PIT regulations). The requirements under the SEBI Insider Trading Regulations are as follows:

Compliances under SEBI (Prohibition of Insider Trading) Regulations, 2015
Particulars Responsibility
1. Restrictions on communication and trading by Insiders
No insider shall provide, or allow access to any unpublished price sensitive information, relating to the company or securities listed or proposed to be listed, to any person including other insiders except where such communication was in furtherance of legitimate purposes, performance of duties or discharge of legal obligations  [Regulation 3(1)] Insider (including designated persons,
entities and other persons)
No insider shall procure from or cause the communication by any insider of unpublished price sensitive information, relating to the company or securities listed or proposed to be listed, except in furtherance of legitimate purposes, performance of duties or discharge of legal obligations  [Regulation 3(2)] Insider (including designated persons,
entities and other persons)
The Board of Directors shall make a policy for determination of “legitimate purposes” as a part of “Codes of Fair Disclosure and Conduct” formulated under regulation 8 [Regulation 3(2A)] Board / Compliance Officer
Sharing of UPSI and due notices to be given

The person who received unpublished price sensitive information pursuant to a “legitimate purpose”, to be given due notice to maintain confidentiality of such unpublished price sensitive information in compliance with these regulations [Regulation 3(2B)]

Compliance Officer
The board of directors shall require the parties to execute agreements to contract confidentiality and non-disclosure obligations on the part of such parties [Regulation 3(4)] Board / Compliance Officer
Structural Digital Database

1. The board of directors or head of the organisation of every person required to handle UPSI 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 regulation 3 along with the Permanent Account Number or any other identifier authorized by law where Permanent Account Number is not available2. Such databases shall not be outsourced and maintained with adequate internal controls and checks such as time stamping and audit trails to ensure non-tampering of the database
[Regulation 3(5)]

3.  The structural digital database shall be preserved for a period of atleast 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

Board / Compliance Officer/UPSI owner
4. No insider shall trade in securities that are listed or proposed to be listed on a stock exchange when in possession of unpublished price sensitive information
[Regulation 4(1)]
Insider/ Compliance Officer to ensure compliance through awareness
Approval of Trading plan as formulated and presented by insiders to the compliance officer
[Regulation 5]
Compliance Officer
2. Disclosure of Trading by Insiders
The company shall maintain the disclosures made under this chapter for a minimum period of five years. [Regulation 6(3)] Compliance Officer
A. Initial Disclosure
The following persons on their appointment, made disclosure of their holding of securities of the company as on the date of appointment/becoming:

a. promoter,

b. member of the promoter group,

c. key managerial personnel, and

d. director,

within seven days of such appointment/ becoming a promoter or member of the promoter group [Regulation 7 (1)]

Promoter/ Member of the Promoter Group/ KMP/ Director
Compliance Officer to ensure compliance
 B. Continual Disclosures – Form C
[SEBI vide its circular dt: August 13, 2021 has clarified that manual disclosures under Regulation 7(2)(a) and 7(2)(b) are no more required. But SEBI has added a condition to it. SEBI says that manual disclosures will not be required only if company has complied with September 9, 2020 circular.] [Regulation 7 (2)]
However, as the data of the immediate relatives has not been uploaded on designated depositary, it is advisable to manual file the disclosures of
immediate relatives of designated persons.
Not Mandatory. Please refer the Company’s Insider Trading Policy to ensre that it has been amended to incorporate this amendment by SEBI.
3. Code of Fair Disclosure and Conduct
1. The Company shall formulate  a ‘Code on fair disclosure and conduct’ providing for a code of practices and processes for fair disclosures of unpublished price sensitive information

2.  The code adheres to the principles as set out in Schedule A of the Regulations without diluting the provisions of the regulations in any manner

3.  The code shall be published on the official website of the company

4. The company shall promptly notify  the stock exchanges with respect to formulating of such code and any amendments thereto

Compliance Officer
Schedule A – Contents of Code of Fair Disclosure and Conduct

5. Prompt public disclosure of unpublished price sensitive information that impacted price discovery no sooner than credible and concrete information came into being in order to make such information generally available?

6. Uniform and universal dissemination of unpublished price sensitive unpublished price sensitive information to avoid selective disclosure?

7. Senior officer to be designated as a chief investor relations officer to deal with dissemination of information and disclosure of unpublished price sensitive information?

8.  Prompt dissemination of unpublished price sensitive information that got disclosed selectively, inadvertently or otherwise to make such information generally available

9. Appropriate and fair response to be given to queries on news reports and requests for verification of market rumours by regulatory authorities

10.  Ensure nformation shared with analysts and research personnel was not unpublished price sensitive information.

11. Best practices to be developed to make transcripts or records of proceedings of meetings with analysts and other investor relations conferences on the official website to ensure official confirmation and documentation of disclosures made

12. All unpublished price sensitive information to be handled on a need-to-know basis.

Compliance Officer
4. Code of Conduct (insider Trading Policy)
1.  The Board of Directors shall ensure that the chief executive officer or managing director formulate a code of conduct with their approval to regulate, monitor and report trading by its designated persons  and immediate relatives of designated persons Board / Compliance Officer
2.  The code of conduct shall be formulated by adopting minimum standards set out in the Schedule B to the regulations without diluting the provisions of these regulations in any manner
3.  The company shall identify and designate a senior officer as ‘Compliance Officer’ to administer the compliance of the Code of Conduct and other requirements under these regulations?
4.  The board of directors in consultation with the compliance officer specified the designated persons to be covered by the code of conduct on the basis of their role and function in the organisation and the access that such role and function would provide to unpublished price sensitive information in addition to seniority and professional designation
5.  The following persons shall be included within the scope of ‘designated persons to be covered by the code of conduct’ by the board of directors:

a. Employees of such listed company, intermediary 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;

b. 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;

c. All promoters of listed companies and promoters who are individuals or investment companies for intermediaries or fiduciaries;

d. 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;

e. Support staff of listed company, intermediary or fiduciary such as IT staff or secretarial staff who have access to unpublished price sensitive information Schedule B Minimum Standards for Code of Conduct

Monthly register to Chairman and Quarterly information to Audit Committee

1.  The compliance officer reports to the board of directors and in particular, provides reports to the Chairman of the Audit Committee, if any, or to the Chairman of the board of directors at such frequency as may be stipulated by the board of directors, but not less than once in a year, on compliance with the provisions of these regulations and code of conduct

Compliance Officer
2. All information shall be handled within the organisation on a need-to-know basis and no unpublished price sensitive information was communicated to any person except in furtherance of legitimate purposes, performance of duties or discharge of legal obligations
3. The code of conduct shall contain norms for appropriate Chinese Walls procedures, and processes for permitting any designated person to “cross the wall”
4. The company shall ensure that a notional trading window shall used as an instrument of monitoring trading by the designated persons
5. The trading window was closed when the compliance officer determined that a designated person or class of designated persons could reasonably be expected to have possession of unpublished price sensitive information
Trading Window Closure

6. Trading restriction period shall be made applicable from the end of every quarter till 48 hours after the declaration of financial results. The gap between clearance of accounts by audit committee and board meeting should be as narrow as possible and preferably on the same day to avoid leakage of material information.

No Trades during window closure

7. Ensure that designated persons and their immediate relatives did not trade in securities when the trading window was closed

8. The timing for re-opening of the trading window was determined by the compliance officer taking into account various factors including the unpublished price sensitive information in question becoming generally available and being capable of assimilation by the market, which in any event was not earlier than forty-eight hours after the information became generally available.
Pre-clearance Approval

9 When the trading window is open, whether trading by designated persons was subjected to pre-clearance by the compliance officer, if the value of the proposed trades was above such thresholds (equal to or exceed Rs 25 lakhs in value)

10.   All requirements of the code of conduct relating to availing/giving of pre-clearance were complied with

Pre-clearance Validity

11. The pre-clearance approval shall not be more than seven trading days, within which trades that have been pre-cleared have to be executed by the designated person, failing which fresh pre-clearance would be needed for the trades to be executed.

Contra Trades not allowed

12. The code of conduct of the company specified the period, which in any event was not less than six months, within which a designated person who was permitted to trade shall not execute a contra trade

Contra Trade Waiver

13. The compliance officer may grant any relaxation from strict application of such restriction for reasons recorded in writing provided that such relaxation did not violate these regulations

14 Where a contra trade was executed, inadvertently or otherwise, in violation of such a restriction, whether the profits from such trade shall be disgorged for remittance to the Board for credit to the Investor Protection and Education Fund administered by the Board under the Act
15. Whether the code of conduct of the company stipulates such formats as the board of directors deems necessary for making applications for pre-clearance, reporting of trades executed, reporting of decisions not to trade after securing pre-clearance and for reporting level of holdings in securities
16. The code of conduct shall stipulate the sanctions and disciplinary actions, including wage freeze, suspension, recovery, clawback etc., that may be imposed, by the company 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
Intimation of violations to the Stock exchanges

16. The code of conduct specifies that in case it is observed by the company that there has been a violation of these regulations, it shall 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.

Initial, Continuous and Annual Disclosures

17. The designated persons shall 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

c) a material financial relationship

d) Phone, mobile and cell numbers which are used by them?

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

18. Whether the company has a process for how and when people are brought ‘inside’ on sensitive transactions?
19. Whether the Individuals were made aware of the duties and responsibilities attached to the receipt of Inside Information, and the liability that attaches to misuse or unwarranted use of such information?
5. Institutional Mechanism for Prevention of Insider trading
1. The Chief Executive Officer, Managing Director or such other analogous person of a listed company, has put in place adequate and effective system of internal controls to ensure compliance with the requirements given in these regulations to prevent insider trading Compliance Officer
2. The internal controls shall include the following:

a. all employees who have access to unpublished price sensitive information are identified as designated employee;

b. all the unpublished price sensitive information shall be identified and its confidentiality shall be maintained as per the requirements of these regulations;

c. adequate restrictions shall be placed on communication or procurement of unpublished price sensitive information as required by these regulations;

d. lists of all employees and other persons with whom unpublished price sensitive information is shared shall be maintained and confidentiality agreements shall be signed or notice shall be served to all such employees and persons;

e. all other relevant requirements specified under these regulations shall be complied with;

f. periodic process review to evaluate effectiveness of such internal controls

Audit Committee to review compliance and internal controls atleast once in a financial year
3.   The Audit Committee shall review compliance with the provisions of these regulations at least once in a financial year and verifies that the systems for internal control are adequate and are operating effectively
Audit Committee
4.   The Company shall formulate written policies and procedures for inquiry in case of leak of unpublished price sensitive information or suspected leak of unpublished price sensitive information, which has been approved by board of directors of the company and accordingly initiate appropriate inquiries on becoming aware of leak of unpublished price sensitive information or suspected leak of unpublished price sensitive information and inform SEBI promptly of such leaks, inquiries and results of such inquiries Compliance Officer
5.   The 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 Compliance Officer
Compliances under System Driven Disclosures
As per SEBI’s September 9, 2020 circular (a) Listed company shall provide the information including PAN number of Promoter(s) including member(s) of the promoter group, designated person(s) and director(s) (‘Entities’) as per PIT Regulations to the designated depository. For PAN exempt entities, the Investor’s Demat account number(s) shall be specified by the listed company
Further, as per the PIT FAQs released by SEBI on April 29, 2021 – “data
of immediate relatives of Designated Persons need not be uploaded as of now”.
Has already been complied by the listed entities.
In case of any subsequent update in the details of the entities, the listed company shall update the information with the designated depository on the same day. Compliance Officer

Author Bio

Qualification: CS
Company: N/A
Location: Bengaluru, Karnataka, India
Member Since: 11 Apr 2022 | Total Posts: 1

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