Responsibilities of Compliance Officer under PIT Regulations 2(c)
♦ Compliance of Policies
♦ Compliance of Procedures
♦ Maintenance of Records
♦ Monitoring compliance of Rules for preservation of UPSI
♦ Monitoring of Trades
♦ Implementation of Code in guidance of ‘Board’
♦ Insider means any person who is:
Connected Person 2(d)(i)
♦ Any person who is or has been connected with the:
♦ Person having professional business relationship (that provides access to UPSI)
♦ Immediate relative of connected person
♦ Holding Co., Subsidiary Co. or Associate Co.
♦ Intermediary (or any employee or director thereof)
♦ Investment Co., Trustee Co., or Asset Management Co. (or any employee of director thereof)
♦ Official of Stock Exchange or Clearing House Corporation
♦ Member of Board of Trustee of Mutual Fund*
♦ Member of Board of Directors of Asset Management Co.*
*including its employees
Deemed Connected Person 2(d)(ii)
*Director + Immediate Relative + Banker = greater than 10% interest
Connected Person 2(d)
Connected person is a person who due to his association with the Company puts him in the possession of UPSI.
This definition is also intended to bring into its ambit persons who may not seemingly occupy any position in a company but are in regular touch with the company and its officers and are involved in the know of the company’s operations.
What is Unpublished Price Sensitive Information 2(n)
Objectives of Insider Trading Code
Prevention of Communication 3
Regulation 3(1): No Insider shall communicate or provide access to UPSI to anyone.
Regulation 3(2): No person shall procure any communication by an insider of an UPSI.
Exception: UPSI can be provided or procured:
Legitimate Purpose 3(2A), 3(2B)
Responsibility on the Board to formulate policy for determination of legitimate purpose forming part of Codes of fair disclosure and conduct under regulation 8;
All persons receiving UPSI in accordance with policy of legitimate purpose will be deemed insiders.
Board of Directors shall give notice to recipient of the UPSI to maintain confidentiality.
Exceptions to Regulation 4(1) cases where insider can prove his innocence 4(1)(i)
Off-market inter-se transfer between two insiders in possession of same UPSI without violation of Regulation 3; and both parties had made a conscious and informed decision.
Disclosure of trades would be required to be done by the insiders within two working days: to the Company;
Company to intimate the disclosure so received to the Stock Exchange(s) where its securities are listed within two days of receipt of disclosure or from becoming aware of such information.
Exceptions to Regulation 4(1) cases where insider can prove his innocence4(1)(ii)(iii)(iv)(v)
4(1)(ii) Block deal window mechanism transaction between two person in possession of same UPSI without violation of Regulation 3; and both parties had made a conscious and informed decision.
4(1)(iii) Transaction carried in pursuance of statutory or regulatory obligation to carry out a bonafide transaction;
4(1)(iv) Transaction undertaken pursuant to exercise of Stock Options where exercise price was pre-determined in compliance with applicable regulations.
4(1)(vi) Transaction in pursuance of Trading Plan.
Trading Plan 5(1)
Insiders can formulate trading plan
Trading plan to be submitted to Compliance Officer
Compliance Officer to disclosure Trading Plan on Stock Exchange(s) website.
Insiders who are in perpetual possession of Price Sensitive information can use Trading Plan to effectuate genuine trading in securities of the Company.
Contents of Trading Plan 5(2)(v)
(Trading Plan shall not entail trading for market abuse) 5(2)(vi).
Meaning of Market abuse
Market manipulation by doing/ not doing an act that creates false, misleading impression as to:
With intention to make undue financial gain or any other benefit.
Approval and Monitoring of Trading plan 5(3)
(no pre clearance of trade would be required in case Trading plan has been approved by the CO)
Exception to Implementation of Trading Plan 5(4)
Disclosure of Trading Plan 5(5)
Format: as specified by SEBI from time to time
Disclosure to: Stock Exchange(s) where securities listed
Trading by: Person, his immediate relatives, any other person for whom such person takes trading decisions.
Trading in: Securities and Derivatives
Record Keeping: Minimum Five Years
Type of Disclosures 7
Initial Disclosure 7(1)(b)
Code of Fair Disclosure and Conduct 8
Board to formulate code of practices and procedures for fair disclosure of UPSI as per Schedule A, that Company will follow.8(1)
Disclosure of such code is required to be made on website of the Company.8(1)
Disclosure of such code and every amendment thereto should be promptly intimated to Stock Exchange(s)8(2)
Code of Conduct to regulate, monitor and report trading 9
Board to ensure formulate a code of conduct (Annexure B) to:
By: Designated Persons and their immediate relatives
Compliance Officer to be designated by the Board to administer compliance of code of conduct
Board in consultation with Compliance Officer to specify designated person on whom code will be applicable.
Internal Control Mechanism 9A
Role of Audit Committee 9A(4)
Procedure to deal with leak of UPSI 9A(5)(6)
Formulation and approval of policies and procedures by the Board for inquiry in case of leak/ suspected leak of UPSI; 9A(5)
Initiating inquiries on becoming aware of leak/ suspected leak of UPSI. Inform the Board promptly of any such leaks, inquiries and result of such inquiries; 9A(5)
Company to have Whistle Blower (‘WB’) Policy. 9A(6)
Employees to be made aware of the WB Policy to report instances of leak of UPSI. 9A(6)
Type of Disclosures to Stock Exchange(s)
Time limit 30(6)
Continual disclosure 30(7)
Disclosure on website 30(8)
Disclosure relating to Subsidiary 30(9)
Schedule III, Part A, Para A, Para B
By CS Mohnish Dutta| ICSI M.No. F10411