SEBI (PROHIBITION OF INSIDER TRADING) REGULATIONS 2015

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Shailashri Bhaskar

Company Secretary

WHO IS A COMPLIANCE OFFICER

• COMPLIANCE OFFICER
• A SENIOR OFFICER DESIGNATED AS SUCH
• REPORTING TO THE BOARD OF DIRECTORS OR HEAD OF THE ORGANIZATION
• FINANCIALLY LITERATE AND CAPABLE OF APPRECIATING THE REQUIREMENTS OF LEGAL AND REGULATORY COMPLIANCE UNDER THESE REGULATIONS
• RESPONSIBLE FOR COMPLIANCE, MAINTENANCE OF RECORDS AND ADHERENCE TO THE RULES FOR PRESERVATION OF UNPUBLISHED PRICE SENSITIVE INFORMATION, MONITORING OF TRADES AND IMPLEMENTATION OF THE CODES SPECIFIED
• UNDER THE OVERALL SUPERVISION OF THE BOARD OF DIRECTORS OF A LISTED COMPANY OR THE HEAD OF AN ORGANISATION, AS THE CASE MAY BE.
• SIGNIFICANCE WITH LODR??

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WHO IS A CONNECTED PERSON

• ANY PERSON WHO IS OR HAS DURING THE SIX MONTHS PRIOR TO THE ACT OF INSIDER TRADING BEEN
• ASSOCIATED WITH A COMPANY DIRECTLY OR INDIRECTLY IN ANY CAPACITY
• BY REASON OF FREQUENT COMMUNICATION WITH ITS OFFICERS
• OR CONTRACTUAL, FIDUCIARY OR BY WAY OF EMPLOYMENT
• OR A DIRECTOR OR AN OFFICER OR AN EMPLOYEE OF THE COMPANY
• OR HOLDS A PROFESSIONAL OR BUSINESS RELATIONSHIP WITH THE COMPANY WHETHER TEMPORARY OR PERMANENT
• AND THIS ALLOWS SUCH PERSON DIRECT OR INDIRECT ACCESS TO
• UNPUBLISHED PRICE SENSITIVE INFORMATION
• IS REASONABLY EXPECTED TO HAVE SUCH ACCESS.

WHO IS DEEMED TO BE CONNECTED

• IMMEDIATE RELATIVES
• HOLDING, ASSOCIATE AND SUBSIDIARY COMPANIES
• BANKERS TO THE COMPANY
• CONCERN, FIRM, TRUST OR HUF OR COMPANY WHERE THE DIRECTOR OR IMMEDIATE RELATIVE OF THE DIRECTOR OR THE BANKER OF THE COMPANY HAS MORE THAN 10% OF THE SHARES OR INTEREST
• UPTO THE CONNECTED PERSON TO PROVE HE IS NOT CONNECTED

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WHO IS AN INSIDER

• A CONNECTED PERSON
• OR A PERSON WHO IS IN POSSESSION OR HAVING ACCESS TO UNPUBLISHED PRICE SENSITIVE INFORMATION
• THE REGULATIONS FURTHER STATE THAT IT IS THE INTENTION OF THE REGULATION TO BRING UNDER ITS AMBIT ANY PERSON WHO HAS ACCESS TO UNPUBLISHED PRICE SENSITIVE INFORMATION.
• ONUS OF SHOWING THAT THE PERSON HAD ACCESS TO UPSI IS ON THE REGULATOR WHILE THE PERSON ON WHOM THE CHARGE IS LEVELLED HAS TO PROVE THAT HE DID NOT HAVE ACCESS TO UPSI OR HIS TRADING WAS COVERED BY EXONERATING CIRCUMSTANCES

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TRADING

• GIVEN A MORE INCLUSIVE DEFINITION TO INCLUDE DEALING
• MEANS BUYING, SELLING, SUBSCRIBING AND DEALING OR AGREEING TO BUY, SELL, SUBSCRIBE OR DEAL IN A SECURITY. EVEN INCLUDES PLEDGING.

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THE REGULATIONS

• NO INSIDER SHALL COMMUNICATE, PROVIDE OR ALLOW ACCESS TO
• UNPUBLISHED PRICE SENSITIVE INFORMATION (COULD ALSO MEAN TO INCLUDE POTENTIAL PRICE SENSITIVE INFORMATION)
• OF ANY LISTED ENTITY
• OR ANY ENTITY WHICH IS PROPOSED TO BE LISTED
• TO ANY PERSON
• OR TO ANY OTHER INSIDER
• UNLESS SUCH COMMUNICATION / ACCESS IS REQUIRED FOR THE PERFORMANCE OF DUTIES OR FURTHERANCE OF LEGAL OLIGATIONS
• IN SHORT TO SHARE ONLY “ON NEED TO KNOW” BASIS

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• NO PERSON SHALL PROCURE OR MAKE AN INSIDER COMMUNICATE
• ANY UNPUBLISHED PRICE SENSITIVE INFORMATION
• OF A LISTED ENTITY
• OR A COMPANY PROPOSED TO BE LISTED
• UNLESS IT IS REQUIRED FOR THE FURTHERANCE OF THE PERFORMANCE OF ONE’S DUTIES OR DISCHARGE OF LEGAL OBLIGATIONS
• PERSON WHO UNLAWFULLY PROCURES UNPUBLISHED PRICE SENSITIVE INFORMATION SHALL ALSO BE INDULGING IN AN ILLEGAL ACT
• EXAMPLE – RAJARATNAM FROM RAJAT GUPTA

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• CAN BE COMMUNICATED IN CERTAIN CIRCUMSTANCES
• TAKEOVER
• A TRANSACTION WHICH IS BENEFICIAL FOR THE COMPANY LIKE A PRIVATE EQUITY INVESTMENT
• BUT THE PARTIES TO EXECUTE A CONFIDENTIALITY AGREEMENT
• THE ENTITIES SHALL ALSO NOT TRADE IN THE SECURITIES OF THE COMPANY WHILE BEING IN POSSESSION OF SUCH INFORMATION – EXAMPLE PALRED TECHNOLOGIES LIMITED

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• ANY INSIDER WHO IS IN POSSESSION OF UNPUBLISHED PRICE SENSITIVE INFORMATION /POTENTIAL PRICE SENSITIVE INFORMATION CANNOT TRADE IN THE SECURITIES OF THE COMPANY WHILE BEING IN POSSESSION
• OF A LISTED COMPANY
• OR OF A COMPANY WHICH IS PROPOSED TO BE LISTED
• WHAT IS THE POSITION OF A PROMOTER WHO IS PERPETUALLY IN POSSESSION OF UNPUBLISHED PRICE SENSITIVE INFORMATION
• TO BE READ WITH REGULATION 30 OF THE LISTING REGULATIONS, WHICH REQUIRES COMMUNICATION OF INFORMATION LIKELY TO AFFECT THE SHARE PRICE

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EXEMPTIONS

• OFF MARKET INTER-SE TRANSFER AMONGST PROMOTERS
• TRANSACTION BY NON INDIVIDUALS
• THE PERSON IN POSSESSION AND THE PERSON WHO TOOK THE DECISION WERE DIFFERENT
• THE PERSON WHO TOOK THE DECISION WAS NOT IN POSSESSION OF THE UPSI
• THE PERSON IN POSSESSION DID NOT COMMUNICATE THE UPSI TO THE PERSON WHO TOOK THE DECISION

TO SHOW THAT ARRANGEMENTS WERE IN PLACE

• AS PER THE TRADING PLAN

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TRADING PLAN

• AN INSIDER SHALL BE ENTITLED TO PREPARE A TRADING PLAN
• GET IT APPROVED BY THE COMPLIANCE OFFICER
• AND THE SAME CAN BE SENT TO THE STOCK EXCHANGE FOR PUBLIC DISCLOSURE
• TRADES CAN THEREAFTER BE DONE AS PER THE PLAN
• CANNOT TRADE FOR A PERIOD OF 6 MONTHS FROM THE DATE OF DISCLOSURE OF THE PLAN

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• CANNOT TRADE FROM 20 TRADING DAYS PRIOR TO THE END OF A FINANCIAL PERIOD TO 2^ND TRADING DAY AFTER DISCLOSURE OF FINANCIAL RESULTS
• TRADING PLAN SHALL BE FOR ATLEAST ONE YEAR
• SHALL NOT OVERLAP FOR A PERIOD ALREADY GIVEN
• GIVE THE VALUE OR THE NUMBER OF SHARES ALONG WITH THE NATURE OF TRADES / DATES WHEN TO BE EFFECTED
• SHALL NOT BE FOR MARKET ABUSE

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• THE TRADING PLAN SHALL BE APPROVED BY THE COMPLIANCE OFFICER WHO SHALL ALSO TAKE NECESSARY UNDERTAKINGS IF NECESSARY
• THE TRADING PLAN ONCE ANNOUNCED SHALL BE IRREVOCABLE AND SHALL BE MANDATORILY IMPLEMENTED BY THE INSIDER
• HE CANNOT DEVIATE FROM THE PLAN NOR CAN HE EXECUTE ANYTHING OUTSIDE THE PLAN
• ON APPROVAL THE COMPLIANCE OFFICER SHALL COMMUNICATE THE TRADING PLAN TO THE STOCK EXCHANGE

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• TRADING PLAN DISCLOSED BY PROMOTER OF D S KULKARNI DEVELOPERS
• Company hereby provide the trading plan of Mr. D.S. Kulkarni, Chairman & Managing Director of the Company as informed as under: Security : Equity Shares : 2,00,000 Nature of Trade : Purchase Interval : December 1, 2015 to May 31, 2016. The said trading plan commences on June 1, 2015 and ends on May 31, 2016. Mr. D.S. Kulkarni has undertaken that he would not be trading in the said shares during the cool-off period of six months i.e. from June 1, 2015 to November 30, 2015.
• VAGUE, DOES NOT CONFORM TO THE SEBI STIPULATIONS.
• NO REACTIONS SO FAR

MODEL CODE OF CONDUCT

• CASE LAW – FALCON TYRES
• IMPORTANT CLAUSES
• TRADE ONLY WHEN THE TRADING WINDOW IS OPEN
• TRADING WINDOW TO OPEN 48 HOURS AFTER THE UPSI BECOMES GENERALLY AVAILABLE TO THE PUBLIC
• TRADING WINDOW APPLICAPLE TO AUDITORS, COMPANY SECRETARIES IN PRACTICE, LAWYERS, CONSULTANTS ETC
• TRADING SUBJECT TO PRE CLEARANCE
• NOT TO TAKE PRECLEARANCE IF IN POSSESSION OF UPSI

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• TO EXECUTE TRADE WITHIN A MAXIMUM OF 7 WORKING DAYS – LESSER DAYS CAN ALSO BE FIXED
• NO CONTRA TRADE FOR PERIOD OF ATLEAST 6 MONTHS
• SHARES ACQUIRED ON EXERCISE OF ESOPS ARE EXEMPTED
• BUY BACK OFFERS, RIGHTS ISSUES, BONUS ISSUES, OPEN OFFERS EXEMPTED
• CASE LAW – ORCHID CHEMICALS / SUZLON
• IF CONTRAVENED – THE PROFITS TO BE DISGORGED BY COMPANY AND FORWARDED TO SEBI FOR CREDIT TO IEPF
• COMPANY TO IMPOSE SUCH ACTION AS WAGE FREEZE, SUSPENSIONS ETC
• TO DEVISE SUCH FORMATS AS MAY BE NECESSARY FOR DISCLOSURES

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• THANK YOU