The Securities and Exchange Board of India (“SEBI”) issued an informal guidance to Apollo Tricoat Tubes Limited (“Company”), a listed entity, on October 1, 2019 (“Informal Guidance”).
The issues that arose for consideration were as follows:
SEBI referred to regulation 9(4) of the PIT Regulations, which provides as follows:
“Regulation 9(4): “For the purpose of sub regulation (1) and (2), the board of directors or such other analogous authority shall in consultation with the compliance officer specify the designated persons to be covered by the code of conduct on the basis of their role and function in the organisation and the access that such role and function would provide to unpublished price sensitive information in addition to seniority and professional designation and shall include:-
[…]
(iii) All promoters of listed companies and promoters who are individuals or investment companies for intermediaries or fiduciaries; […]”
SEBI stated that since PIT Regulations identify promoters as designated persons, a person identified as a promoter will have to comply with the code of conduct requirements as required by other designated persons. In the present case, Mr. Saket Agarwal, by virtue of being named as a promoter and on account of continuing to hold greater than 10% (ten percent) of the total voting rights in the Company, shall be identified as a designated person for the purpose of compliance with the Company’s code of conduct. Furthermore, any trade executed by Mr. Saket Agarwal during the trading window closure would tantamount to violation of clause 4 of schedule B of the PIT Regulations.
This update has been contributed by Aastha (Partner) and Radhika Kothari (Associate).
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