The Securities and Exchange Board of India (SEBI) has notified
the SEBI (Prohibition of Insider Trading) Regulations, 2015 on
15th January, 2015.
The new Regulations chalk out a stricter and more focused
regulatory regime and have put in place a stronger legal and
enforcement framework for prevention of Insider Trading. The
penalties imposed under the Companies Act, 2013 and the SEBI Act,
1992 for non-compliance and contravention of these Regulations are
huge. The new Regulations have been uploaded on the MMFSL intranet
Following are the important provisions of the Regulations:
There shall be prohibition on all designated
persons for exercise of ESOPs during the trading window
closure period and there shall be prohibition on
all designated persons for exercise of ESOPs for six
months after sale of shares, and vice versa.
There shall be no contra trade even in case of ESOP.
The Regulations prescribe that every employee shall disclose to
the Company (Compliance Officer) details of the
trade within 2 trading days of the transaction, if
the value of securities traded in one or a series of
transactions in any calendar quarter exceeds Rs.10 lakhs. The
disclosures shall include those relating to trading by
immediate relatives and by any other person for whom the
trading decisions are taken.
A designated person who buys or sells any number of
securities of the company shall not enter into an opposite
transaction i.e. sell or buy respectively any number of securities
of the Company during the next six months following the prior
A new concept of trading plans has been introduced in
India for an insider under the Regulations.
If any Designated Person or his/her immediate relative(s)
intend(s) to trade in securities exceeding market value of Rs.
42 lakhs during a calendar month, then he/she
should apply to the Compliance Officer for pre-clearance, even
during the period when the window is open.
The trading window shall be closed for adopting and considering
financial results and other Unpublished Price Sensitive Information
The trading window shall be closed when the Compliance Officer
determines that a designated person or class of designated persons
can reasonably be expected to have possession of unpublished price
sensitive information. Moreover, the designated persons and their
immediate relatives shall not trade in securities when the trading
window is closed.
The Ministry of Corporate Affairs notified on June 5, 2015 that certain provisions of the Companies Act, 2013 shall not apply to private limited companies or shall apply with such exceptions or modifications as directed in the notification.
Whilst trade and barter have existed since early times, the modern practice of forming business relationships through the means of contract has come into existence only since the industrial revolution in the West.
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