Securities and Exchange Board of India (SEBI) has issued the Securities and Exchange Board of India (Prohibition of Insider Trading) (Third Amendment) Regulations, 2024. These amendments modify the existing regulations to address various aspects of insider trading. The key changes include expanding the definition of a “connected person” to include individuals who have access to unpublished price-sensitive information (UPSI) due to their relationship with company directors, officers, or employees. The amendments also clarify that “immediate relatives” are now referred to simply as “relatives,” and they are considered connected persons for the purpose of these regulations. Further, specific provisions related to the definition of “generally available information” and the onus of proof for those accused of insider trading are detailed. The regulations emphasize that anyone with access to UPSI, regardless of how they gained it, is considered an insider and could be subject to scrutiny.
SECURITIES AND EXCHANGE BOARD OF INDIA
NOTIFICATION
Mumbai, the 4th December 2024
SECURITIES AND EXCHANGE BOARD OF INDIA (PROHIBITION OF INSIDER TRADING) (THIRD AMENDMENT) REGULATIONS, 2024
No. SEBI/LAD-NRO/GN/2024/215—In exercise of the powers conferred by section 30 read with clause (g) of sub-section (2) of section 11 and clauses (d) and (e) of section 12A of the Securities and Exchange Board of India Act, 1992 (15 of 1992), the Board hereby makes the following regulations to further amend the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015, namely: —
1. These Regulations may be called the Securities and Exchange Board of India (Prohibition of Insider Trading) (Third Amendment) Regulations, 2024.
2. They shall come into force on the date of their publication in the Official Gazette.
3. In the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015, –
I. in regulation 2, sub-regulation (1),
(1) in clause (d), sub-clause (i) shall be substituted with the following:
“(i) any person who is or has been, during the six months prior to the concerned act, associated with a company, in any capacity, directly or indirectly, including by reason of frequent communication with its officers or by being in any contractual, fiduciary or employment relationship or by being a director, officer or an employee of the company or holds any position including a professional or business relationship, whether temporary or permanent, with the company, that allows such a person, directly or indirectly, access to unpublished price sensitive information or is reasonably expected to allow such access.”
(2) in clause (d), sub-clause (ii),
in item (a), the words “an immediate” shall be substituted with the word “a”;
(a) in item (j),
(i) the word “immediate”, appearing after the words “wherein a director of a company or his”, shall be omitted;
(ii) after the words and symbol “of the holding or interest;” the word “or” shall be inserted.
(b) after item (j) and before the Note, the following items shall be inserted, namely:
“(k). a firm or its partner or its employee in which a connected person specified in sub-clause (i) of clause (d) is also a partner; or
(l). a person sharing household or residence with a connected person specified in sub-clause (i) of clause (d);”
(3) in clause (d), in the Note,
(a) after the words and symbol “price sensitive information.” the word “Immediate relatives” shall be substituted with the word “Relatives”;
(b) the word “not”, appearing after the words “bring into its ambit persons who may”, shall be omitted;
(c) after the word “seemingly” the word “not” shall be inserted.
(4) in clause (f), the Note shall be omitted;
(5) in clause (g), the Note shall be substituted with the following, namely:
“NOTE: Since “generally available information” is defined, it is intended that anyone in possession of or having access to unpublished price sensitive information should be considered as an “insider” regardless of the manner in which one came into possession of or had access to such information. Various circumstances are provided to enable such a person to demonstrate that he has not indulged in insider trading. Therefore, this definition is intended to bring within its reach any person who is in receipt of or has access to unpublished price sensitive information. The onus of showing that a certain person was in possession of or had access to unpublished price sensitive information at the time of trading would, therefore, be on the person leveling the charge after which the person who has traded when in possession of or having access to unpublished price sensitive information may demonstrate that he was not in such possession or that he has not traded or he could not access or that his trading when in possession of such information was squarely covered by the exonerating circumstances.”
(6)after clause (hb), the following clause shall be inserted, namely:
“(hc) “relative” shall mean the following:
i. spouse of the person;
ii. parent of the person and parent of its spouse;
iii. sibling of the person and sibling of its spouse;
iv. child of the person and child of its spouse;
v. spouse of the person listed at sub-clause (iii); and
vi. spouse of the person listed at sub-clause (iv)
NOTE: It is intended that the relatives of a “connected person” too become connected persons for the purpose of these regulations. It is a rebuttable presumption that a connected person had UPSI.”
BABITHA RAYUDU, Executive Director
[ADVT.-III/4/Exty./741/2024-25]
Footnote:
1. The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015 was published
in the Gazette of India on January 15, 2015 vide No. LAD-NRO/GN/2014-15/21/85.
2. The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015 was subsequently amended on, –
i. December 31, 2018 by the Securities and Exchange Board of India (Prohibition of Insider Trading) (Amendment) Regulations, 2018 vide No. SEBI/LAD-NRO/GN/ 2018/59.
ii. January 21, 2019 by the Securities and Exchange Board of India (Prohibition of Insider Trading) (Amendment) Regulations, 2019 vide No. SEBI/LAD-NRO/GN/ 2019/02.
iii. July 25, 2019 by the Securities and Exchange Board of India (Prohibition of Insider Trading) (Second Amendment) Regulations, 2019 vide No. SEBI/LAD-NRO/GN/ 2019/23.
iv. September 17, 2019 by the Securities and Exchange Board of India (Prohibition of Insider Trading) (Third Amendment) Regulations, 2019 vide No. SEBI/LAD-NRO/GN/ 2019/32.
v. July 17, 2020 by the Securities and Exchange Board of India (Prohibition of Insider Trading) (Amendment) Regulations, 2020 vide No. SEBI/LAD-NRO/GN/ 2020/23.
vi. October 29, 2020 by the Securities and Exchange Board of India (Prohibition of Insider Trading) (Second Amendment) Regulations, 2020 vide No. SEBI/LAD-NRO/GN/ 2020/38.
vii. April 26, 2021 by the Securities and Exchange Board of India (Prohibition of Insider Trading) (Amendment) Regulations, 2021 vide No. SEBI/LAD-NRO/GN/ 2021/17.
viii. August 05,2021 by the Securities and Exchange Board of India (Prohibition of Insider Trading) (Second Amendment) Regulations, 2021 vide No. SEBI/LAD-NRO/GN/ 2021/37.
ix. November 24, 2022 by the Securities and Exchange Board of India (Prohibition of Insider Trading) (Amendment) Regulations, 2022 vide No. SEBI/LAD-NRO/GN/ 2022/108.
x. May 17, 2024 by the Securities and Exchange Board of India (Prohibition of Insider Trading) (Amendment) Regulations, 2024 vide No. SEBI/LAD-NRO/GN/2024/181.
xi. June 25, 2024 by the Securities and Exchange Board of India (Prohibition of Insider Trading) (Second Amendment) Regulations, 2024 vide No. SEBI/LAD-NRO/GN/2024/184.
