Jul 30, 2019

SEBI (Prohibition of Insider Trading) (Second Amendment) Regulations, 2019

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In response to numerous confusion arising in SEBI (Prohibition of Insider Trading) Regulation, 2015, Corporate Professionals group also had the occasion to make representation to SEBI, few of which has been notified by the watchdog of securities market vide its second amendment to the insider laws i.e. SEBI (Prohibition of Insider Trading) (Second Amendment) Regulations, 2019 dated July 25, 2019.

The major highlights of the amendments are as follow:

  • Regulation 9A(2)(a): the word “designated employee” is termed as “designated persons”.
  • Schedule B clause (4):
    1. Trading restriction period shall be made applicable from end of each quarter.
    2. The trading window restrictions shall not apply in respect of –
      • Off-market inter-se transfer between insiders (in compliance with Regulation 4(1)(i)).
      • Transaction carried through the block deal window mechanism (in compliance with Regulation 4(1)(ii)).
      • Transaction carried out pursuant to a statutory or regulatory obligation (in compliance with Regulation 4(1)(iii)).
      • Transaction undertaken pursuant to the exercise of stock options (in compliance with Regulation 4(1)(iv)).
      • Trades pursuant to a trading plan (in compliance with Regulation 4(1)(iv)).  
      • Pledge of shares for a bonafide purpose such as raising of funds, subject to pre-clearance by the compliance officer and compliance with the respective regulations made by the Board.
      • Transactions undertaken in accordance with respective regulations made by SEBI such as acquisition by conversion of warrants or debentures, subscribing to rights issue, further public issue, preferential allotment or tendering of shares in a buy-back offer, open offer, delisting offer.
  • Explanation to Schedule B clause (14) and Schedule C clause (12): To constitute a “material financial relationship”  payment by way of a loan or gift is required to arise from Designated Person and shall now constitute 25% of his total annual income (excluding transactions on arm’s length basis).

To view the full notification click here.

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