The Securities and Exchange Board of India (“SEBI”) has notified Securities and Exchange Board of India (Prohibition of Insider Trading) (Second Amendment) Regulations, 2024 (“Amendment Regulations”) to further amend the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015 (“Principal Regulations”). The Amendment Regulations will gain effect on 23rd September, 2024.
Key Highlights of the Amendment Regulations:
- The required waiting period before an insider can commence trading has been reduced from six months to one hundred and twenty calendar days. The Amendment has explained that companies declare their results quarterly and there exists a trading restriction from the end of the quarter to two days after the declaration of quarterly results, typically around one month for most companies. Hence, justifying the one hundred and twenty calendar days cool-off period.
- The specific trading restrictions around financial result announcements and the requirement for a minimum twelve-month trading period are no longer part of the trading plan requirements.
- The trading plan now requires more detailed information for each trade, including specific date ranges and price limits, providing a clearer approach to trading parameters.
- Now, there should be an outer limit on the duration of the time-period for splitting trades across different dates to prevent misuse. Also, the insider may provide price limits within the range specified in the Regulations to protect against unexpected price movements.
- The Amendment Regulations now allows for deviations from the trading plan due to permanent incapacity, bankruptcy, or operation of law, removes the requirement for compliance officer confirmation for deferring the plan’s commencement due to unpublished price-sensitive information, and includes new conditions for executing trades within specified price limits.
- Now it specifies a two-trading day timeframe for the compliance officer to decide on the trading plan and requires that any approved plan be notified to the stock exchanges on the same day it is approved.
A Copy of the Notification is linked below, for your ease of reference.
Source: Securities and Exchange Board of India
