SEBI issues Clarifications on Insider Trading

SEBI issues Clarifications on Insider Trading

The Securities and Exchange Board of India has issued Revised FAQs on SEBI (Prohibition of Insider Trading) Regulations, 2015 wherein it has put forth some clarifications.It has notified that no pre-clearance is required for exercise of Employee stock options.Employee stock options being issued under SEBI (Share Based Employee Benefits) Regulations, 2014, the exercise of such stock options is covered under clause 4(3)(b) of Schedule B of the SEBI (PIT) Regulations, 2015. However, sale of shares by employees obtained after exercise of options shall not be covered under the aforesaid Clause.

Regarding the issue of trading in ADRs and GDRs, it has been clarified by the Capital Market Regulator that trading in ADRs and GDRs of listed companies is covered under the relevant provisions of PIT Regulations. Employees of such companies, including foreign nationals, who are designated persons, shall be required to follow the code of conduct for trading in ADRs and GDRs. For such disclosures by such designated persons, a unique identifier analogous to PAN may be used.

As far as the information that is required for a listed Company to maintain in its structured digital database under Regulation 3(5), in case the designated person is a fiduciary or intermediary, is concerned the following mandate is to be followed-
The listed company should maintain structured digital database internally, which shall contain information including-(i)Details of the Unpublished Price Sensitive Information (UPSI); (ii).Details of persons with whom such UPSI is shared (along with their PANs/other unique identifier) and details of persons who have shared the information.

It has also been emphasised that similarly, another structured digital database should be maintained internally by fiduciary or intermediary, capturing information as mentioned above at point (i) and (ii) , in accordance with Regulation 9A (2)(d) and as required under Schedule C.

Regarding the issue of what kind of information should be collected by the company/ intermediary/ fiduciary under PIT Regulations in case a designated person resigns, it has been notified that all information which is required to be collected from designated persons, should be collected till date of service of such employees with the company.
Upon resignation from service of designated person, a company/ intermediary/ fiduciary should maintain the updated address and contact details of such designated person. The company/intermediary/ fiduciary should make efforts to maintain updated address and contact details of such persons for one year after resignation from service. Such data should be preserved by the company/ intermediary/ fiduciary for a period of 5 years.