In line with the Discussion Paper on amendment to the SEBI (Prohibition of Insider Trading) Regulations, 2015 (“Regulations”) issued earlier, the Securities and Exchange Board of India (“SEBI”), in a notification dated September 17, 2019, has now issued the Securities and Exchange Board of India (Prohibition of Insider Trading) (Third Amendment) Regulations, 2019 (“amendment”). The amendment will gain effect from December 26, 2019.
A new chapter (Chapter IIIA) has been introduced under the Regulations by way of the amendment.
- The new provisions allow the voluntary submission of Original Information by an informant under a Voluntary Information Disclosure Form. Where there is collection or substantial recovery of the monetary sanctions, SEBI may declare an Informant eligible for Reward. A separate application for claiming the tentative reward must be made in Informant Reward Claim Form along with a disclosure of identity. Provision for confidentiality of Informant is also made.
- The amendment has also made a provision for the Protection against retaliation and victimisation. As per this, every person required to have a Code of Conduct under these regulations must ensure that the Code of Conduct provides for suitable protection against any discharge, termination, demotion, suspension, threats, harassment, directly or indirectly or discrimination against any employee who files a Voluntary Information Disclosure Form, irrespective of whether the information is considered or rejected by the Board or he or she is eligible for a Reward under these regulations.
- Any term in an agreement or Code of Conduct, which precludes any person, other than an advocate, from submitting to the Board information relating to the violation of the securities laws has been classified as void agreements.
- The amendment prohibits persons from impeding persons from communicating to the SEBI a confidentiality agreement (other than agreements related to legal representations of a client and communications there under) with respect to such communications.
- Employer must not require an employee to notify him of any Voluntary Information Disclosure Form filed with the Board or to seek its prior permission or consent or guidance of any person engaged by the employer before or after such filing.