On July 17, 2020, the Securities and Exchange Board of India (“SEBI”) notified the SEBI (Prohibition of Insider Trading) (Amendment) Regulations, 2020 (“Amendment Regulations”) to further amend the SEBI (Prohibition of Insider Trading) Regulations, 2015 (“PIT Regulations”). 

Regulation 3(5) of the PIT Regulations, which deals with maintenance of a structured digital database in respect of unpublished price sensitive information (“UPSI”), has been amended to provide that the responsibility for maintaining such database will lie with the board of directors or head(s) of the organisation of every person required to handle UPSI. In addition to the names of the persons with whom UPSI is shared, the database should contain the nature of UPSI and the names of the persons who have shared UPSI. Furthermore, such database cannot be outsourced and has to be maintained internally. 

Regulation 3(6) has been added to the PIT Regulations, which provides that the board of directors/head(s) of the organisation of every person required to handle UPSI should ensure that the structured digital database is preserved for a period of not less than 8 (eight) years after completion of the relevant transactions and, in the event of receipt of any information from SEBI regarding any investigation or enforcement proceedings, the relevant information in the structured digital database should be preserved till the completion of such proceedings. 

Further, Regulation 7(2)(c) has been added to the PIT Regulations, which provides that the continual disclosures in respect of trading will have to be made in the form and manner as may be specified by SEBI from time to time.  

Clause 4(3)(b) of Schedule B of the PIT Regulations has been amended to provide that the trading window restrictions will not apply to transactions which are undertaken through such mechanism (in addition to the currently prescribed mechanisms such as conversion of debentures/warrants, open offer, delisting offer etc.) as may be specified by SEBI from time to time. 

Clause 12 of Schedule B of the PIT Regulations has been amended to provide that any amount collected in respect of contravention of the code of conduct for listed companies should be remitted to SEBI for credit to the Investor Protection and Education Fund. Similarly, clause 10 of Schedule C of the PIT Regulations has been amended to provide that any amount collected in respect of contravention of the code of conduct for intermediaries/fiduciaries should be remitted to SEBI for credit to the Investor Protection and Education Fund. 

Further, clause 13 of Schedule B of the PIT Regulations has been amended to provide that the code of conduct for listed companies should specify that in case of a violation of the PIT Regulations, the listed company will promptly inform the stock exchange(s) (as opposed to the earlier requirement of informing SEBI) where the concerned securities are traded, in such form and such manner as may be specified by SEBI from time to time. Similarly, clause 11 of Schedule C of the PIT Regulations has been amended to provide that the code of conduct for intermediaries/fiduciaries should specify that in case of a violation of the PIT Regulations, the intermediary/fiduciary will promptly inform the stock exchange(s) (as opposed to the earlier requirement of informing SEBI) where the concerned securities are traded, in such form and such manner as may be specified by SEBI from time to time. 

Read the Amendment Regulations here.

This update has been contributed by Aastha (Partner) and Radhika Kothari (Associate).