Introduction: The Securities and Exchange Board of India (SEBI) implemented the SEBI (Prohibition of Insider of Trading Regulation) Rules, 2018 (PIT Regulations), introducing the concept of the Structure Digital Database (SDD) effective April 1st, 2019. This article delves into the pivotal aspects of SDD as mandated by SEBI.
As per Regulation 3(1) of the PIT Regulation, No insider shall communicate, provide, or allow access to any unpublished price sensitive information (UPSI), relating to a company or securities listed or proposed to be listed, to any person including other insiders except where such communication is in furtherance of legitimate purposes, performance of duties or discharge of legal obligations.
“unpublished price sensitive information” means any information, relating to a company or its securities, directly or indirectly, that is not generally available which upon becoming generally available, is likely to materially affect the price of the securities and shall, ordinarily including but not restricted to, information relating to the following:
1. financial results;
2. change in capital structure;
3. mergers, de-mergers, acquisitions, delistings, disposals and expansion of business and such other transactions;
4. changes in key managerial personnel.
Regulation 3(2) No person shall procure from or cause the communication by any insider of unpublished price sensitive information, relating to a company or securities listed or proposed to be listed, except in furtherance of legitimate purposes, performance of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Regulation 3(5) The board of directors or head(s) of the organisation of every person required to handle unpublished price sensitive information shall ensure that a structured digital database is maintained containing
- the nature of unpublished price sensitive information and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
Regulation 3(6) The board of directors or head(s) of the organisation of every person required to handle unpublished price sensitive information shall ensure that the structured digital database is preserved for a period of not less than eight years after completion of the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.
An intermediary/entity/ or fiduciary are required to maintain separate Digital Database containing
- The UPSI is shared and the person with whom it is shared
- The UPSI shared and the person who have shared such UPSI with an intermediary/ fiduciary/entity
The Database shall not be outsourced and shall be maintained with adequate internal controls and checks such as time stamping and audit trails to ensure non-tampering of the database. The same is prerequisite for compliance with Regulation 3(5) & 3(6) of PIT Regulations, 2015.
Entries once made in SDD, cannot be altered or modified and should be non-tampered. Any modification/alteration of entries once made is not permitted. If any entry made needs to be altered, then a separate entry can be made citing reference to the earlier one with full corrected details and the reasons for correction.
Period of Compliance
On a quarterly basis
◼ For Q2 FY 22-23 –by 18thNovember, 2022
◼ For Q3 FY 22-23 –by 21stJanuary, 2023
Certified by either Company Secretary or Company Secretary in practice
Power to SE to inspect the SDD system
◼ After giving notice of 1 working day
◼ If company is non-compliant with respect to SDD, appropriate action shall be initiated by the Exchanges
Manner of submission
◼ BSE: BSE Listing Centre > Listing Compliance > Compliance Module > Structured Digital Database (SDD) Compliance Certificate
◼ NSE: This certificate has to be emailed on the following email id of the Exchange: sdd_pit@nse.co.in.
Conclusion: Understanding and adhering to SEBI’s regulations on Structure Digital Database (SDD) is imperative for entities dealing with Unpublished Price Sensitive Information. Compliance ensures transparency, accountability, and protection against potential regulatory actions. Entities must diligently follow the specified rules, deadlines, and submission procedures to maintain the integrity of their SDD systems.
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