Chapter - III Disclosures of Trading by Insiders

Chapter – III
Disclosures of Trading by Insiders

General provisions. Reg. 6
(1) Every public disclosure U/T/Ch. shall
be made in such form as may be specified.
(2) Disclosures to be made by any person
U/T/Ch. shall include those relating to
trading by
Such person’s IR’s, &
By any other person for whom such
person takes trading decisions.
General provisions. Reg. 6
 Primarily aimed at preventing abuse by trading when
in possession of UPSI
 What matters is?
Whether the person who takes trading decisions is
in possession of such information
Rather than
Whether the person who has title to the trades is in
such possession.
 Disclosure - Need to be by
Person who executed trading
IR’s & of other persons for whom the person
concerned takes trading decisions.
Reg. 6
(3) Disclosures of trading in securities
shall also include trading in Derivatives of
Securities & -
Traded value of the derivatives shall be taken
into account for purposes of this Ch.:
 P… trading in derivatives of securities is
permitted by any law for the time being in
force.
 (4) Disclosures made U/T/Ch. shall be
maintained by the Co., for a minimum period of
5 years, in such form as may be specified.
Disclosures by certain persons Reg. 7
 (1) Initial Disclosures -
 (a) Every - Promoter - KMP - Director of every Co.
whose securities are listed on any RSE
Shall disclose his holding of securities of the Co. as
on - Date of T/R’s taking effect
To Co. within 30 days of T/R’s taking effect;
 (b) Every person on appointment as a KMP / a
director / upon becoming a promoter
 Shall disclose his holding of securities of the Co. as on
date of appointment / becoming a promoter, to the Co.
 Within 7 days of such appointment / becoming a
promoter.
Continual Disclosures - Reg. 7(2)
 (a) Every promoter, employee & director… -
shall disclose to Co. –
 No. of such securities acquired / disposed of
within 2 trading days of such transaction if the
value of the securities traded,
Whether in one transaction / a series of transactions
over any calendar quarter,
Aggregates to a traded value in excess of Rs. 10 lakh
/ such other value as may be specified;
 (b) Every Co. shall notify the particulars of such
trading to SE on which the securities are listed
within 2 trading days of receipt of the disclosure
/ from becoming aware of such information.
Continual Disclosures - Reg. 7(2)
 Explanation –
 It is clarified for the avoidance of doubts that
the disclosure of the incremental transactions
after any disclosure U/T/S/R,
 Shall be made when the transactions effected
after the prior disclosure cross the threshold
specified in S/R (2) cl. (a).
(2) Continual Disclosures.
Disclosures by other CP’s:
(3) Any Co. whose securities are listed on a
SE may, at its discretion require any other
CP / class of CP’s to make disclosures
of holdings & trading in securities of the Co.
In such form & at such frequency as may be
determined by the Co.
In order to monitor compliance with T/R’s.
 NOTE: This is an enabling provision for listed
Co’s to seek information from those to whom it
has to provide UPSI.
 This provision confers discretion on any co. to
seek such information.
 E.g. - Listed Co. may ask that a management
consultant who would advise it on corporate
strategy & would need to review UPSI, should
make disclosures of his trades to the Co.
CHAPTER – IV
CODES OF FAIR DISCLOSURE
AND CONDUCT
Code of Fair Disclosure Reg. 8
 (1) BOD’s of every Co., whose securities are
listed on a SE,
Shall formulate & publish on its official
website
A code of practices & procedures (CPP) for
fair disclosure of UPSI
 That - It would follow in order to adhere to each of the
principles set out in Sch. A to T/R’s, without diluting
the provisions of T/R’s in any manner.
 (2) Every such CPP… for fair disclosure of UPSI &
every amendment thereto shall be promptly intimated
to SE where the securities are listed.
Code of Conduct (CC) - Reg. - 9
 (1) BODs of every listed Co. & market intermediary
shall formulate a CC
To regulate, monitor & report trading by its
employees & other CPs towards achieving
compliance with T/R’s, adopting the minimum
standards set out in Sch. B to T/R’s, without diluting
the provisions of T/R’s in any manner.
 (2) Every other person who is required to handle UPSI
in course of business operations shall formulate a CC
To regulate, monitor & report trading by employees
& other CPs towards achieving compliance with
T/R’s, adopting the minimum standards set out in
Sch. B to T/R….
(3) Every listed Co., market intermediary
& other persons formulating a CC
Shall identify & designate a CO to
administer the CC & other requirements
U/T/R’s.
N: Intended to designate a senior officer as
CO with the responsibility to administer
the CC & monitor compliance with T/R’s.
Chapter – V - Miscellaneous
Sanction for violations.
 Reg. 10 - Any contravention of T/R’s shall be dealt
with by SEBI in accordance with the Act.
 Power to remove difficulties
 Reg. 11 - In order to remove any difficulties in the
interpretation / application of T/P/O/T/R’s - SEBI shall
have the power to issue directions through guidance
notes / circulars:
 P…. where any direction is issued by SEBI in a specific
case relating to interpretation / application of any
provision of T/R, it shall be done only after affording a
reasonable opportunity of being heard to CP’s & after
recording reasons for the direction.
 Repeal and Savings - Reg. 12(1) SEBI (PIT) Regulations, 1992
are hereby repealed.
(2) N…such repeal -
 (a) Previous operation of the repealed Reg’s / anything duly done / suffered
thereunder, any right, privilege, obligation / liability acquired, accrued /
incurred U/T/ repealed Reg’s, any penalty, forfeiture / punishment incurred
in respect of any offence committed against the repealed Reg’s, / any
investigation, legal proceeding / remedy in respect of any such right,
privilege, obligation, liability, penalty, forfeiture / punishment as aforesaid,
shall remain unaffected as if the repealed Reg’s had never been repealed;
and
 (b) Anything done / any action taken / purported to have been done / taken
including any adjudication, enquiry / investigation commenced / show-cause
notice issued U/T repealed Reg’s prior to such repeal, shall be deemed to
have been done / taken under the corresponding provisions of T/ Reg’s;
 (3) After the repeal of SBEI (PIT) Reg, 1992, any reference thereto in any
other regulations made, guidelines or circulars issued thereunder by SEBI
shall be deemed to be a reference to the corresponding provisions of these
regulations.
SCHEDULE A
[See sub-regulation (1) of regulation 8]
SCHEDULE A
[See sub-regulation (1) of regulation 8]
SCHEDULE B - See Reg. 9 (1) & (2)
SCHEDULE B - (3)
Sch. B – (4)
DP’s may execute trades subject to compliance with T/R
5
(6) (7) & (8)
• Board’s right to investigate
THE END

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Chapter – III

Disclosures of Trading by Insiders

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