The Securities and Exchange Board of India (“SEBI”) has, in a Press Release dated July 22, 2019, informed that the Guidance Note on SEBI (Prohibition of Insider Trading) Regulations, 2015 has been revised on July 5, 2019 to bring clarity on certain points.
Background :
The SEBI (Prohibition of Insider Trading) Regulations, 2015, which came into effect from May 15th, 2015, raised certain queries from the market participants seeking guidance on the interpretation of some provisions of the Regulations. A Guidance Note was issued by SEBI on 24th August 2015 which aims to give clarity on-
(i) Employee Stock Ownership Plan
(ii) Contra Trade
(iii) Pledge
(iv) Other Miscellaneous queries
Now, with the present amendment, the Guidance note has been enhanced to provide clarity on the following points-
- Requirement of Maintaining Structured Digital Database
Regulation 3(5) prescribes that the board of directors shall ensure that a structured digital database is maintained containing the names of such persons orentities as the case may be with whom information is shared under this regulation along with the Permanent Account Number or any other identifierauthorized by law where Permanent Account Number is not available. Such databases shall be maintained with adequate internal controls and checks such as time stamping and audit trails to ensure non-tampering of the database.
The Guidance answers whether the requirement to maintain Structured Digital Database under Regulation 3(5) is applicable on intermediaries and fiduciaries ?
Guidance : The requirement to maintain structured digital database under Regulation 3(5), containing the names of such persons or entities with whom UPSI is shared, is applicable to listed companies, and intermediaries and fiduciaries who handle UPSI of a listed company in the course of business operations.
- Scope of “Investment Company” as mentioned in Regulation 9 (4) (iii) is elaborated in the Guidance.
The regulation 9 (4) (iii) intends to include only those non-individual corporate promoters of intermediaries or fiduciaries as designated person, whose main object or principal activity, is investing in securities of other companies. For e.g. if the promoter of a broking entity is a Bank, then such promoter shall not be specified as designated person to be covered by the code of conduct of the intermediary. However, if the promoter of a broking entity is an investment company which holds investments in various companies, then such an entity shall be specified as designated person to be covered by the code of conduct of the intermediary
The revised note has been made available on the SEBI website.
Source: Securities and Exchange Board of India
