Prohibition of Insider Trading

Unpublished Price Sensitive Information

Regulation 2(1)(n) of the SEBI (Prohibition of Insider Trading) Regulations, 2015, defines the term unpublished price sensitive information which means any information, relating to a company or its securities, directly or indirectly, that is not generally available which upon becoming generally available, is likely to materially affect the price of the securities and shall, ordinarily including but not restricted to, information relating to the following:

i)financial results;

ii)dividends;

iii)changes in capital structure;

iv)mergers, de-mergers, acquisitions, delistings, disposals and expansion of business, award or termination of order/contracts not in the normal course of business and such other transactions;

v)changes in key managerial personnel, other than due to superannuation or end of term, and resignation of a Statutory Auditor or Secretarial Auditor;

vi)change in rating(s), other than ESG rating(s);

vii)fund raising proposed to be undertaken;

viii)agreements, by whatever name called, which may impact the management or control of the company;

ix)fraud or defaults by the company, its promoter, director, key managerial personnel, or subsidiary or arrest of key managerial personnel, promoter or director of the company, whether occurred within India or abroad;

x)resolution plan/ restructuring or one time settlement in relation to loans/borrowings from banks/financial institutions;

xi)admission of winding up petition filed by any party /creditors and admission of application by the Tribunal filed by the corporate applicant or financial creditors for initiation of corporate insolvency resolution process against the company as a corporate debtor, approval of resolution plan or rejection thereof under the Insolvency and Bankruptcy Code, 2016;

xii)initiation of forensic audit, by whatever name called, by the company or any other entity for detecting misstatement in financials, misappropriation/ siphoning or diversion of funds and receipt of final forensic audit report;

xiii)action(s) initiated or orders passed within India or abroad, by any regulatory, statutory, enforcement authority or judicial body against the company or its directors, key managerial personnel, promoter or subsidiary, in relation to the company;

xiv)outcome of any litigation(s) or dispute(s) which may have an impact on the company;

xv)giving of guarantees or indemnity or becoming a surety, by whatever named called, for any third party, by the company not in the normal course of business;

xvi)granting, withdrawal, surrender, cancellation or suspension of key licenses or regulatory approvals.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2025, Q. 6(a) (Syllabus 2022).

According to the provisions of Regulation 2(1)(d) of the SEBI (Prohibition of Insider Trading) Regulations, 2015, “Connected Person” means:

–any person who is or has during six months prior to the concerned act, has been associated with the company, directly or indirectly;

–in any capacity (including by reason of frequent communication with its officers or by being in any contractual, fiduciary or employment relation); or

–is a director, officer or an employee of the company or holds any position including a professional or business relationship between himself and the company, whether temporary or permanent,

–that allows such person, directly or indirectly, access to unpublished price-sensitive information or reasonably expected to allow such access.

Without prejudice to the generality of the foregoing, the persons falling within the following categories shall be deemed to be connected persons unless the contrary is established-

(a)an immediate relative of connected persons; or

(b)a holding company or associate company or subsidiary company; or

(c)an intermediary as specified in section 12 of the SEBI Act, 1992 or an employee or director thereof; or

(d)an investment company, trustee company, asset management company or an employee or director thereof; or

(e)an official of a stock exchange or of clearing house or corporation; or

(f)a member of board of trustees of a mutual fund or a member of the board of directors of the asset management company of a mutual fund or is an employee thereof; or

(g)a member of the board of directors or an employee, of a public financial institution as defined in section 2 (72) of the Companies Act, 2013; or

(h)an official or an employee of a self-regulatory organization recognised or authorized by the SEBI; or

(i)a banker of the company; or

(j)a concern, firm, trust, Hindu undivided family, company or association of persons wherein a director of a company or his immediate relative or banker of the company, has more than ten per cent. of the holding or interest.

According to the provisions of Regulation 2(1)(g) of the SEBI (Prohibition of Insider Trading) Regulations, 2015, an “Insider” means any person who is:

(1)a connected person; or

(2)in possession of or having access to unpublished price sensitive information.

(i)Ajay was the General Manager of the company, but he resigned 8 months ago. Ajay has completed more than six months since his resignation as General Manager of the company. He is not a connected person and is not in possession of any unpublished price sensitive information. Therefore, he is not an insider as on date, as per the Regulations.

(ii)Rahul works as a Senior Trainee in the office of Secretarial Auditor of the company. Rahul is the Senior Trainee in the office of Secretarial Auditor and thus, being a part of Audit team, he will have access to unpublished price sensitive information due to the nature of work performed by him in the office of Secretarial Auditor. Therefore, he is an insider as on date, as per the Regulations.

(iii)Jyoti is the spouse of an Executive Director of the company. Executive Director is connected person in terms of the Regulations. Spouse, an immediate relative of the connected person, is considered as deemed to be connected person. Therefore, Jyoti is an insider as on date, as per the Regulations.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2024, Q. 1(c) (Syllabus 2017).

Regulation 2(1) (c) of the SEBI (Prohibition of Insider Trading) Regulations, 2015 defines Compliance Officer as any senior officer, designated so and reporting to the Board of Directors or Head of the Organization in case Board is not there, who is financially literate and is capable of appreciating requirements for legal and regulatory compliance under these regulations and who shall be responsible for compliance of policies, procedures, maintenance of records, monitoring adherence to the rules for the preservation of unpublished price sensitive information, monitoring of trades and the implementation of the codes specified in these regulations under the overall supervision of the Board of Directors of the listed company or the Head of the Organization, as the case may be.

Further, in terms of regulation 9(1) of the SEBI (Prohibition of Insider Trading) Regulations, 2015 read with Schedule B, the compliance officer shall report to the board of directors and in particular, shall provide reports to the Chairman of the Audit Committee, if any, or to the Chairman of the board of directors at such frequency as may be stipulated by the board of directors, but not less than once in a year.

The functions and responsibility of the Compliance Officer are specified in Regulation 2(1) (c) of the SEBI (Prohibition of Insider Trading) Regulations, 2015. The company may at its discretion appoint any senior officer as the Compliance Officer, who necessarily report to the Board of Directors or Head of the Organization as the case may be. Appointing any other person shall not be in accordance with the Regulations.

In light of the above provision, a senior person, either Company Secretary or Chief Financial Officer, who is not reporting to the Board cannot as a Compliance Officer. However, in case of appointing more than one person as Compliance Office, they shall be held jointly and severally responsible.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2024, Q. 3(a) (Syllabus 2017).

(i)The Managing Director of ABC Ltd. met with an accident and was hospitalised is not an unpublished price sensitive information (UPSI), as it is an announcement of condition of the Managing Director and it would not impact the market price of the shares.

(ii)EF Ltd. is under negotiation to enter into a foreign collaboration with a Korean company for technical knowhow is an Unpublished price sensitive information, as it would materially affect the price of the shares of the company.

(iii)RBI has increased its repo rate by 25 basis point is not a UPSI as it is announced by RBI officially.

(iv)XY Ltd. is proposing for issue bonus shares for its shareholders is a UPSI as it would materially affect the price of the shares of the company.

(v)The Chairman of RN Ltd. has submitted his resignation to the Board after reading a news article proposing to sell a particular brand to another company by the promoters of the company is a UPSI. While the news article is public information, the fact of resignation of the Chairman is not and hence it is UPSI.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2023, Q. 1(c) (Syllabus 2017).

As per the SEBI (Prohibition of Insider Trading) Regulations, 2015, the definition "insider" means any person who is a connected person or in possession of or having access to unpublished price sensitive information. Since David, General Manager (Finance) of the Suren Enterprises Ltd. was insider and found to be indulging in insider trading activities when in employment of the company. Therefore, SEBI has the right to initiate any proceedings against him.

Penalty for insider trading under section 15G of the SEBI Act, 1992 If any person violates provisions of the SEBI (Prohibition of Insider Trading) Regulations, 2015, he shall be liable for penalty as specified under section 15G of the SEBI Act, 1992. If any insider who-

(i)either on his own behalf or on behalf of any other person, deals in securities of a body corporate listed on any stock exchange on the basis of any unpublished price sensitive information; or

(ii)communicates any unpublished price sensitive information to any person, with or without his request for such information except as required in the ordinary course of business or under any law; or

(iii)counsels, or procures for any other person to deal in any securities of any body corporate on the basis of unpublished price sensitive information. shall be liable to a penalty which shall not be less than ten lakh rupees but which may extend to twenty-five crore rupees or three time the amount of profits made out of insider trading, whichever is higher. Moreover, as per section 24 of the SEBI Act, 1992, if any person contravenes or attempts to contravenes or abets the contravention of the provisions of the SEBI Act, 1992 or of any rules or regulations made thereunder, he shall be punishable with imprisonment for a term which may extend to ten years, or with fine, which may extend to twenty-five crore rupees or with both. Further, if any person fails to pay the penalty imposed by the adjudicating officer or SEBI or fails to comply with any directions or orders, he shall be punishable with imprisonment for a term which shall not be less than one month but which may extend to ten years, or with fine, which may extend to twenty-five crore rupees or with both.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2023, Q. 3(a) (Syllabus 2017).

(i)As per the SEBI (Prohibition of Insider Trading) Regulations, 2015, "Trading" means and includes subscribing, buying, selling, dealing, or agreeing to subscribe, buy, sell, deal in any securities, and "trade" shall be construed accordingly. No insider shall trade in securities that are listed or proposed to be listed on a stock exchange when in possession of unpublished price sensitive information. However, the insider may prove his innocence by demonstrating the circumstance that the transaction in question was undertaken pursuant to the exercise of stock options in respect of which the exercise price was pre-determined in compliance with applicable regulations.

Therefore, exercise of ESOP's/ESPS shall not be considered to be “trading” except for the purposes of Chapter III of the SEBI (Prohibition of Insider Trading) Regulations, 2015 i.e. except for the disclosures requirements under the SEBI (Prohibition of Insider Trading) Regulations, 2015.

(ii)As per Regulation 2(1)(c) of the SEBI (Prohibition of Insider Trading) Regulations, 2015, compliance officer means any senior officer, designated so and reporting to the board of directors or head of the organization in case board is not there. The function and responsibility of the compliance officer are specified in Regulation 2(1)(c) of the SEBI (PIT) Regulations, 2015. The company may at its discretion appoint any senior officer as the compliance officer, necessarily report to the Board of directors or head of the organisation as the case may be.

In view of the above a CFO in the present case cannot act as a Compliance Officer. Appointing any such person shall not be in accordance with the SEBI (Prohibition of Insider Trading) Regulations, 2015.

(iii)Yes, a company may appoint more than one person as Compliance Officer under the SEBI (PIT) Regulations, 2015. In case of appointing more than one person as compliance officer they shall be held jointly and severally responsible.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2022, Q. 3(c) (Syllabus 2017).

(a)Unpublished price sensitive information

“Unpublished price sensitive information” means any information, relating to a company or its securities, directly or indirectly, that is not generally available which upon becoming generally available, is likely to materially affect the price of the securities and shall, ordinarily including but not restricted to, information relating to the following:

i.Financial results;

ii.Dividends;

iii.Change in capital structure;

iv.Mergers, de-mergers, acquisitions, delisting, disposals and expansion of business and such other transactions;

v.Changes in key managerial personnel.

(b)(i) RBI has increased its Statutory Liquidity Ratio (SLR) by 15 basis points. It is not an unpublished price sensitive information as it does not relate to any of the events defined under “Unpublished Price Sensitive Information”.

(ii)The company is increasing its authorized capital: It is unpublished price sensitive information as it is related to change in capital structure which is defined under “Unpublished Price Sensitive Information”.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2021, Q. 2A(iv) (Syllabus 2017).

Person is deemed to be a connected person

The SEBI (Prohibition of Insider Trading) Regulations, 2015 states that a “Person is deemed to be a connected person”, if such person is–

(a)an immediate relative of connected persons; or

(b)a holding company or associate company or subsidiary company; or

(c)an intermediary as specified in section 12 of the SEBI Act or an employee or director thereof; or

(d)an investment company, trustee company, asset management company or an employee or director thereof; or

(e)an official of a stock exchange or of clearing house or corporation; or

(f)a member of board of trustees of a mutual fund or a member of the board of directors of the asset management company of a mutual fund or is an employee thereof; or

(g)a member of the board of directors or an employee, of a public financial institution as defined in section 2 (72) of the Companies Act, 2013; or

(h)an official or an employee of a self-regulatory organization recognised or authorized by SEBI; or

(i)a banker of the company or

(j)a concern, firm, trust, Hindu undivided family, company or association of persons wherein a director of a company or his immediate relative or banker of the company, has more than ten percent of the holding or interest;

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2021, Q. 6A(iii) (Old syllabus).

According to the Regulation 2(c) of SEBI (Prohibition of Insider Trading) Regulations, 2015 "Compliance Officer'" means any senior officer, designated so and reporting to the board of directors or head of the organization in case board is not there, who is financially literate and is capable of appreciating requirements for legal and regulatory compliance under these regulations and who shall be responsible for compliance of policies, procedures, maintenance of records, monitoring adherence to the rules for the preservation of unpublished price sensitive information, monitoring of trades and the implementation of the codes specified in these regulations under the overall supervision of the board of directors of the listed company or the head of an organization, as the case may be.

Explanation - For the purpose of this regulation, "financially literate" shall mean a person who has the ability to read and understand basic financial statements i.e. balance sheet, profit and Loss account, and statement of cash flows As per the explanations, a person can be compliance officer only if he understands the basic financial statement. An engineer graduate who has experience of working as Chief Technology Officer can neither understand the basic financial statement i.e. balance sheet, profit and loss account, and statement of cash flows nor capable of understanding legal and regulatory compliance. Hence he is not eligible for appointment as compliance officer.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2019, Q. 2(c) (Syllabus 2017).

(i)The SEBI (Prohibition of Insider Trading) Regulations, 2015 defines “Unpublished Price Sensitive Information” which means any information, relating to a company or its securities, directly or indirectly, that is not generally available which upon becoming generally available, is likely to materially affect the price of the securities and shall, ordinarily including but not restricted to, information relating to the following:-

(i)financial results;

(ii)dividends;

(iii)change in capital structure;

(iv)mergers, de-mergers, acquisitions, delistings, disposals and expansion of business and such other transactions;

(v)changes in key managerial personnel.

(ii)The promoter of Next Dial Ltd. was involved in the negotiation for fixing the share price and traded in the shares of the company while being privy to the price sensitive information. Therefore, it is alleged that promoter had dealt in the shares of the company while in possession of or on the basis of the Unpublished Price Sensitive Information (UPSI). Additionally, he has also communicated or counseled, directly or indirectly, the UPSI to his wife, who in turn has also traded in the shares of the company.

The definition of Price Sensitive Information also includes the following as Price Sensitive Information; (a) amalgamation, mergers or takeovers, (b) disposal of the whole or substantial part of the undertaking. So Unpublished Price Sensitive Information (UPSI) was existed.

(iii)In the mentioned case, Share Purchase Agreement (SPA) was signed on 25th April, 2018. Taking into consideration when the SPA was signed, the UPSI is considered to have originated on April 25, 2018.

(iv)While imposing monetary penalty, it is obligatory to consider the factors stipulated in Section 15J of the SEBI Act, 1992 which reads as under:

a.the amount of disproportionate gain or unfair advantage, whenever quantifiable, made as a result of the default;

b.the amount of loss caused to an investor or group of investors as a result of the default;

c.the repetitive nature of the default.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2019, Q. 4(a) (Syllabus 2017).

As per Regulation 3 (5) of the SEBI (Prohibition of Insider Trading) Regulations, 2015, the board of directors or head(s) of the organisation of every person required to handle unpublished price sensitive information shall ensure that a structured digital database is maintained containing the nature of unpublished price sensitive information and the names of such persons who have shared the information and also the names of such persons with whom information is shared under this regulation along with the Permanent Account Number or any other identifier authorized by law where Permanent Account Number is not available. Such database shall not be outsourced and shall be maintained internally with adequate internal controls and checks such as time stamping and audit trails to ensure non-tampering of the database.

Example – If the listed company has appointed a law firm or Merchant Banker in respect of fund-raising activity, it should obtain the name of the entity, so appointed, along with the PAN or other identifier, in case PAN is not available. The law firm or the Merchant Banker would in turn maintain its list of persons along with PAN or other unique identifier (in case PAN is not available), in accordance with Regulation 9A(2)(d) of the SEBI (Prohibition of Insider Trading) Regulations, 2015 and as required under Schedule C, with whom they have shared the unpublished price sensitive information.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2025, Q. 4(c) (Syllabus 2022).

Regulation 4 of the SEBI (Prohibition of Insider Trading) Regulations, 2015 prescribes that an insider shall not trade in securities, which are listed or proposed to be listed on stock exchange when in possession of unpublished price sensitive information. However there are certain exemptions:

•When there is an off-market transfer between promoters

–who are aware of price sensitive information without being in breach of regulation 3 and

–both parties had made a conscious and informed trade decision; or

•In the ease of non-individual insiders:

–the individuals who were in possession of such unpublished price sensitive information were different from the individuals taking trading decisions and

–such decision-making individuals were not in possession of such unpublished price sensitive information when they took the decision to trade; and

–appropriate and adequate arrangements were in place to ensure that these regulations are not violated and no unpublished price sensitive information was communicated by the individuals possessing the information to the individuals taking trading decisions; and

–there is no evidence of such arrangements having been breached.

•The trades were pursuant to a trading plan set up in accordance these regulations.

•In the case of connected persons, the onus of establishing, that they were not in possession of unpublished price sensitive information, shall be on such connected persons and in other cases, the onus would be on SEBI.

•SEBI may specify such standards and requirements from time to time, as it may deem necessary for the purpose of these regulations.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2019, Q. 6(d) (Old syllabus).

As per Regulation 5 of the SEBI (Prohibition of Insider Trading) Regulations, 2015, an insider shall be entitled to formulate a trading plan and present it to the compliance officer for approval and public disclosure pursuant to which trades may be carried out on his behalf in accordance with such plan. The Compliance Officer shall review the trading plan to assess whether the plan would have any potential for violation of these regulations and shall be entitled to seek such express undertakings as may be necessary to enable such assessment and to approve and monitor the implementation of the plan.

The following conditions shall be attached to the Trading Plan which the Compliance Officer shall assess while giving approval -

•It shall not entail commencement of trading on behalf of the insider earlier than 6 months from the public disclosure of the plan.

•Unpublished Price sensitive information shall not be in possession from formulation of the plan to implementation.

•It shall entail trading for a period of not less than twelve months.

•It shall not entail overlap of any period for which another trading plan is already in existence.

•It shall set out either the value of trades to be effected or the number of securities to be traded along with the nature of the trade and the intervals at, or dates on which such trades shall be effected.

•It shall not entail trading in securities for market abuse.

•It shall not entail trading for the period between the twentieth trading day prior to the last day of any financial period for which results are required to be announced by the issuer of the securities and the second trading day after the disclosure of such financial results.

•The trading plan once approved shall be irrevocable and the insider shall mandatorily have to implement the plan, without being entitled to either deviate from it or to execute any trade in the securities outside the scope of the trading plan.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2024, Q. 4(b) (Syllabus 2017).

(i)As per Regulation 5 of the SEBI (Prohibition of Insider Trading) Regulations, 2015, an insider shall be entitled to formulate a trading plan in advance and present it to the compliance officer for approval and public disclosure pursuant to which trades may be carried out on his behalf in accordance with such plan. Such trading plan shall not entail commencement of trading on behalf of the insider earlier than six months from the public disclosure of the plan.

In the instant case, Ankur traded in shares of Sitez Ltd. as per trading plan approved on May 19, 2022 by compliance officer. Since, in the given case, Ankur comes to know on July 20, 2022 that this transaction involve unpublished price sensitive information, therefore, such transaction (within six months from public disclosure of the plan) is an insider trading transaction.

(ii)Conditions attached to trading plan are as follows:

•Trading Plan shall entail trading for a period of not less than 12 months.

•Overlapping of trading plans not permitted.

•Trading plan to specify the value of trades/number of securities to be traded and dates etc.

•Trading plan shall not entail trading of securities for market abuse.

•Trading plan not to entail trading for a reasonable period around to declaration of financial results.

•Compliance officer to review, approve and notify the trading plan to stock exchanges.

•Trading plan once approved shall not be revoked.

•Commencement of trading not earlier than 6 months from the public disclosure of the plan.

•Unpublished Price Sensitive Information (UPSI) not in possession from formulation of plan to implementation.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2022, Q. 3(b) (Syllabus 2017).

An insider shall be entitled to formulate a trading plan and present it to the compliance officer for approval and public disclosure pursuant to which trades may be carried out on his behalf in accordance with such plan.

The trading plan shall:

i.not entail commencement of trading on behalf of the insider earlier than six months from the public disclosure of the plan;

ii.not entail trading for the period between the twentieth trading day prior to the last day of any financial period for which results are required to be announced by the issuer of the securities and the second trading day after the disclosure of such financial results;

iii.entail trading for a period of not less than twelve months;

iv.not entail overlap of any period for which another trading plan is already in existence;

v.set out either the value of trades to be effected or the number of securities to be traded along with the nature of the trade and the intervals at, or dates on which such trades shall be effected; and

vi.not entail trading in securities for market abuse.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2021, Q. 2(d) (Syllabus 2017).

In case where the key managerial personnel or promoters may have a chance of getting Unpublished Price Sensitive Information (UPSI) perpetually, they may trade in the securities by submitting Trading Plan and necessary compliance related thereto.

Regulation 5 of the SEBI (Prohibition of Insider Trading) Regulations, 2015 states that an insider would be required to submit trading plan in advance to the compliance officer for his approval. The compliance officer is also empowered to take additional undertakings from the insiders for approval of the trading plan. Such trading plan on approval will also be disclosed to the Stock Exchanges, where the securities of the company are listed.

The trading plan shall comply with the following requirements:

•It shall be submitted for a minimum period of 12 months.

•No overlapping of plan with the existing plan submitted by Insider

•It shall set out either the value of trades to be effected or the number of securities to be traded along with

–the nature of the trade and

–the intervals at, or

–dates on which such trades shall be effected.

•Trading can only commence only after 6 months from public disclosure of plan.

•No trading between 20th day prior to closure of financial period and 2nd trading day after disclosure of financial results.

•Compliance officer to approve the plan.

•The trading plan once approved shall be irrevocable and the insider shall mandatorily have to implement the plan, without being entitled to either deviate from it or to execute any trade in the securities outside the scope of the trading plan.

•Upon approval of the trading plan, the compliance officer shall notify the plan to the stock exchanges on which the securities are listed.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2021, Q. 6(b) (Old syllabus).

According to Regulation 5 of SEBI (Prohibition of Insider Trading) Regulations, 2015, an insider shall be entitled to formulate a trading plan and present it to the compliance officer for approval and public disclosure pursuant to which trades may be carried out on his behalf in accordance with such plan.

The trading plan shall comply with the following requirements:

(a)Trading can commence only after 6 months from public disclosure of plan.

(b)No trading between 20th trading day prior to closure of financial period and 2nd trading day after disclosure of financial results.

(c)It shall be submitted for a minimum period of 12 months.

(d)No overlapping of plan with the existing plan submitted by Insider.

(e)It shall setup either the value of trades to be effected or the number of securities to be traded along with nature of the trade and the intervals at, or dates on which such trades shall be affected.

(f)The trading plan shall not entail trading in securities for market abuse.

(g)The compliance officer shall review the trading plan to assess whether the plan would have any potential for violation of the PIT regulations and shall be entitled to seek such express undertakings as may be necessary to enable such assessment.

(h)Compliance Officer to approve and monitor the implementation of the plan.

(i)The trading plan once approved shall be irrevocable and the insider shall mandatorily have to implement the plan, without being entitled to either deviate from it or to execute any trades in the securities outside the scope of the trading plan.

(Except in few cases like where insider is in possession of price sensitive information at the time of formulation of the plan and such information has not become generally available at the time of the commencement of implementation).

(j)Upon approval of the trading plan, Compliance Officer shall notify the plan to the stock exchanges on which the securities are listed.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2018, Q. 2A(v) (Syllabus 2017).

As per Regulation 8 of the SEBI (Prohibition of Insider Trading) Regulations, 2015, the Principles of Fair Disclosure for purposes of Code of Practices and Procedures for Fair Disclosure of Unpublished Price Sensitive Information as covered in Schedule A to the SEBI (Prohibition of Insider Trading) Regulations 2015, shall be as follows:

1)Prompt public disclosure of unpublished price sensitive information that would impact price discovery no sooner than credible and concrete information comes into being in order to make such information generally available,

2)Uniform and universal dissemination of unpublished price sensitive information to avoid selective disclosure,

3)Designation of a senior officer as a chief investor relations officer to deal with dissemination of information and disclosure of unpublished price sensitive information,

4)Prompt dissemination of unpublished price sensitive information that gets disclosed selectively, inadvertently or otherwise to make such information generally available,

5)Appropriate and fair response to queries on news reports and requests for verification of market rumours by regulatory authorities,

6)Ensuring that information shared with analysts and research personnel is not unpublished price sensitive information,

7)Developing best practices to make transcripts or records of proceedings of meetings with analysts and other investor relations conferences on the official website to ensure official confirmation and documentation of disclosures made,

8)Handling of all unpublished price sensitive information on a need-to-know basis.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2025, Q. 4(c) (Syllabus 2022).

Schedule A of the SEBI (Prohibition of Insider Trading) Regulations, 2015 lays down the following principles of fair disclosure for purposes of Code of Practices and Procedures for Fair Disclosure of Unpublished Price Sensitive Information:-

1.Prompt public disclosure of unpublished price sensitive information that would impact price discovery no sooner than credible and concrete information comes into being, in order to make such information generally available.

2.Uniform and universal dissemination of unpublished price sensitive information to avoid selective disclosure.

3.Designation of a senior officer as a chief investor relations officer to deal with dissemination of information and disclosure of unpublished price sensitive information.

4.Prompt dissemination of unpublished price sensitive information that gets disclosed selectively, inadvertently or otherwise to make such information generally available.

5.Appropriate and fair response to queries on news reports and requests for verification of market rumours by regulatory authorities.

6.Ensuring that information shared with analysts and research personnel is not unpublished price sensitive information.

7.Developing best practices to make transcripts or records of proceedings of meetings with analysts and other investor relations conferences on the official website to ensure official confirmation and documentation of disclosures made.

8.Handling of all unpublished price sensitive information on a need-to-know basis.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2018, Q. 5(e) (Old syllabus).

(i)When the Trading window is open, trading by designated persons shall be subject to pre-clearance by the Compliance Officer, if the value of the proposed trades is above such thresholds as the board of directors may stipulate. Further, Regulation 9 of the SEBI (Prohibition of Insider Trading) Regulations, 2015 (PIT Regulations) states that 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.

(ii)CPPL will be required to obtain a pre-clearance from the compliance officer of MCL for the Proposed Acquisition only if it is designated as a 'designated person' by the board of directors of MCL, in consultation with the compliance officer.

(iii)The compliance officer, under the provisions of the PIT Regulations, is entrusted with ensuring adherence to the PIT Regulations. A compliance officer is not empowered to make any decision based on subjective criteria or reject an application for pre-clearance of a transaction for any ground other than those pertaining to PIT Regulations.

(iv)The compliance officer is required to approve or reject a request for pre-clearance after necessary assessment limited to the PIT Regulations and the Code of Conduct of the company. Clause 8 of Schedule B states that prior to approving any trades, the compliance officer shall be entitled to seek declarations to the effect that the applicant for pre-clearance is not in possession of any unpublished price sensitive information. He shall also have regard to whether any such declaration is reasonably capable of being rendered inaccurate.

(v)Regulation 2(1)(c) of the PIT Regulations lays down that the compliance officer acts under the overall supervision of the board of directors of the listed company or the head of the organization, as the case may be. Additionally, Clause 1 of Schedule B of the PIT Regulations also requires the compliance officer to report to the board of directors and provide reports to the Chairman of the audit committee or board of directors at such frequency as may be stipulated by the board of directors, but not less than once in a year. Hence, any act of the compliance officer may be referred to the board of directors and the audit committee for examination with the extant laws.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2023, Q. 3(a) (Syllabus 2017).

Regulation 9A of the SEBI (Prohibition of Insider Trading) Regulations, 2015 provides that the Chief Executive Officer, Managing Director or such other analogous person of a listed company, intermediary or fiduciary shall put in place adequate and effective system of internal controls to ensure compliance with the requirements given in these regulations to prevent insider trading.

The internal controls shall include the following:

a)all employees who have access to unpublished price sensitive information are identified at designated person;

b)all the unpublished price sensitive information shall be identified and its confidentiality shall be maintained as per the requirements of these regulations;

c)adequate restrictions shall be placed on communication or procurement of unpublished price sensitive information as required by these regulations;

d)lists of all employees and other persons with whom unpublished price sensitive information is shared shall be maintained and confidentiality agreements shall be signed or notice shall be served to all such employees and persons;

e)all other relevant requirements specified under these regulations shall be complied with;

f)periodic process review to evaluate effectiveness of such internal controls.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2021, Q. 2A(v) (Syllabus 2017).

Code of Conduct under Insider Trading Regulations

The board of directors of every listed company and the board of directors or head(s) of the organisation of every intermediary shall ensure that the chief executive officer or managing director shall formulate a code of conduct with their approval to regulate, monitor and report trading by its designated persons and immediate relatives of designated persons towards achieving compliance with SEBI Insider Trading Regulations, adopting the minimum set out standards as per regulations.

The board of directors or head(s) of the organisation, of every other person who is required to handle unpublished price sensitive information in the course of business operations shall formulate a code of conduct to regulate, monitor and report trading by their designated persons and immediate relative of designated persons towards achieving compliance with Insider Trading regulations, adopting the minimum set out standards as per regulations.

Every listed company, intermediary and other persons formulating a code of conduct shall identify and designate a compliance officer to administer the code of conduct and other requirements under Insider Trading regulations.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2020, Q. 6A(iii) (Old syllabus).

In order to remove any difficulties in the interpretation or application of the provisions of SEBI (Insider Trading) Regulations, the SEBI shall have the power to issue directions through guidance notes or circulars.

However, where any direction is issued by the SEBI in a specific case relating to interpretation or application of any provision of SEBI(Insider Trading) Regulations, it shall be done only after affording a reasonable opportunity of being heard to the concerned persons and after recording reasons for the direction.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2021, Q. 5(d) (Old syllabus).

The obligations cast upon the Company Secretary in relation to insider trading regulations can be summarized as under. The Company Secretary shall:

1.Ensure compliance with SEBI (Prohibition of Insider Trading) Regulations, 2015 including maintenance of various documents.

2.Frame a code of fair disclosure and conduct in line with the model code specified in the Schedule A of the Insider Trading Regulations and get the same approved by the board of directors of the company.

3.Place before SEBI the “minimum standards for Code of Conduct” to regulate, monitor and report trading by insiders as enumerated in the Schedule B of the Insider Trading regulations.

4.Receive initial disclosure from every Promoter, KMP and director or every person on appointment as KMP or director or becoming a Promoter shall disclose its shareholding in the prescribed form within:

a.30 days from Insider Trading regulations taking effect or

b.7 days of such appointment or becoming a promoter

5.Receive from every Promoter, employee and director, continual disclosures of the number of securities acquired or disposed of and changes therein, even if the value of the securities traded, exceeds ?10 lakh with single or series of transaction in any calendar quarter in prescribed form within two trading days of:

a.receipt of the disclosure or

b.from becoming aware of such information

6.Ensure that no trading shall between 20th day prior to closure of financial period and 2nd trading day after disclosure of financial results.

7.Approve the trading plan and after the approval of the trading plan, as compliance officer shall notify the plan to the stock exchanges on which the securities are listed.

8.Maintain records, as a Compliance Officer, of all the declarations given by the directors/designated employees/partners in the appropriate form for a minimum period of three years.

9.Maintain confidentially list of such securities as a “restricted list” which shall be used as the basis for approving or rejecting applications for pre-clearance of trades.

10.Frame and then to monitor adherence to the rules for the preservation of “Price sensitive information”.

11.Maintain a record of names of files containing confidential information deemed to be price sensitive information and persons in charge of the same.

12.Keep records of periods specified as ‘close period’ and the ’Trading window’

13.Receive and maintain records of periodic and annual statement of holdings from directors/officers/ designed employees and their dependent family members.

14.Ensure that the “Trading Window” is closed at the time of :

–Declaration of financial results(quarterly, half-yearly and annual)

–Declaration of dividends(“interim and final)

–Issue of securities by way of public/right/bonus etc.,

–Any Major expansion plans or execution of new projects.

–Amalgamation, mergers, takeovers and buy-back

–Any change in policies, plans or operations of the company

15.Place before the Chief Executive Officer/Partner or a committee notified by the organization/firm, as a Compliance Officer, on a monthly basis all the details of the dealing in the securities by designated employees/directors/partners of the organization/firm.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2019, Q. 6(d) (Old syllabus).

Principles and procedures of Fair Disclosure

As laid down in Schedule A of the SEBI (Prohibition of Insider Trading) Regulations, 2015, companies will adhere to the following to ensure fair disclosure of events and occurrence that could impact price of its securities in the market:

•Prompt public disclosure of Unpublished Price Sensitive Information that would impact price discovery no sooner than credible and concrete information comes into being in order to make such information generally available.

•Uniform and universal dissemination of Unpublished Price Sensitive Information to avoid selective disclosure.

•Designation of a senior officer as a chief investor relations officer to deal with dissemination of information and disclosure of unpublished price sensitive information.

•Prompt dissemination of Unpublished Price Sensitive Information that gets disclosed selectively, inadvertently or otherwise to make such information generally available.

•Appropriate and fair response to queries on news reports and requests for verification of market rumours by regulatory authorities.

•Ensuring that information shared with analysts and research personnel is not unpublished price sensitive information.

•Developing best practices to make transcripts or records of proceedings of meetings with analysts and other investor relations conferences on the official website to ensure official confirmation and documentation of disclosures made.

•Handling of all unpublished price sensitive information on a need-to-know basis.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2021, Q. 6A(ii) (Old syllabus).

In light with the provisions of the SEBI (Prohibition of Insider Trading) Regulations, 2015 relating to Minimum Standards for Code of Conduct for Listed Companies to Regulate, Monitor and Report Trading by Designated Persons, the answer is provided below:

(i)Incorrect. The compliance officer shall report to the board of directors and in particular, shall provide reports to the Chairman of the Audit Committee, if any, or to the Chairman of the board of directors at such frequency as may be stipulated by the board of directors but not less once in year.

(ii)Incorrect. The code of conduct shall contain norms for appropriate Chinese Walls procedures, and processes for permitting any designated person to ‘cross the wall’.

(iii)Correct. The timing for re-opening of the trading window shall be determined by the compliance officer taking into account various factors including the unpublished price sensitive information in question becoming generally available and being capable of assimilation by the market, which in any event shall not be earlier than forty-eight hours after the information becomes generally available.

(iv)Correct. Designated persons and immediate relatives of designated persons in the organisation shall be governed by an internal code of conduct governing dealing in securities.

(v)Incorrect. Designated persons and their immediate relatives shall not trade in securities when the trading window is closed.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2024, Q. 1(b) (Syllabus 2017).

(i)Role of Company Secretary in monitoring trading window under SEBI (Prohibition of Insider Trading) Regulations, 2015 is as under:

•To ensure that the trading window shall be closed when a designated person or class of designated persons can reasonably be expected to have possession of unpublished price sensitive information. Such closure shall be imposed in relation to such securities to which such unpublished price sensitive information relates.

•To ensure that the trading window is closed at the time of

a)declaration of Financial results

b)declaration of dividends;

c)change in capital structure;

d)mergers, de-mergers, acquisitions, de-listings, disposals and expansion of business and such other transactions;

e)changes in key managerial personnel

(ii)To ensure that designated persons and their immediate relatives shall not trade in securities when the trading window is closed.

(iii)To ensure that no trading shall between 20th day prior to closer of financial period and 2nd trading day after disclosure of financial results.

(iv)To approve the trading plan and after the approval of trading plan, as compliance officer shall notify the plan to the stock exchanges on which the securities are listed.

(v)To keep records of period specified as ‘close period’ and the ‘trading window’.

(vi)To ensure that the trading restrictions are strictly observed and all directors/ officers/ designated employees conduct all their dealings in the securities of the company only in a valid trading window and do not deal in the company’s securities during the period when the trading window is closed.

(vii)The timing for re-opening of the trading window shall be determined by the compliance officer taking into account various factors including the unpublished price sensitive information in question becoming generally available and being capable of assimilation by the market, which in any event shall not be earlier than forty-eight hours after the information becomes generally available.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2020, Q. 2A(i) (Syllabus 2017).

The minimum standards for code of conduct to regulate, monitor and report trading by employees and other connected persons, is set out in schedule B to the SEBI (Prohibition of Insider Trading) Regulations, 2015, which is discussed below:

i.The compliance officer shall report to the Board of Directors and in particular, help provide reports to the chairman of the audit committee, if any, or to the chairman of the board of Directors at such frequency as may be stipulated by the board of Directors.

ii.All information shall be handled within the organisation on a need-to-know basis and no unpublished price sensitive information shall be communicated to any person except in furtherance of the insiders legitimate purposes, performance of duties of discharge of his legal obligations.

iii.The code of conduct shall contain norms for appropriate Chinese Walls procedures, and processes for permitting any designated person to cross the wall.

iv.Employees and connected persons designated on the basis of their functional role (designated persons) in the organisation shall be governed by an internal code of conduct governing dealings in securities.

v.The board of director shall in consultation with the compliance officer specify the designated persons to be covered by such code on the basis of their role and function in the organisation. Due regard shall be had to the access that such role and function would provide to unpublished price sensitive information in addition to seniority and professional designation.

vi.Designated persons may execute trades subject to compliance with these regulations. Towards this end, notional trading window shall be used as an instrument of monitoring trading by the designated persons.

vii.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 incentive information. Search closer shall be imposed in relation to such securities to which such unpublished price sensitive information relates.

viii.Designated persons and their immediate relatives shall not trade in securities when the trading window is closed.

ix.The timing for reopening of the trading window shall be determined by the compliance officer taking into account various factors including the unpublished price sensitive information in question becoming generally available and being capable of assimilation by the market, in any event shall not be earlier than 48 hours after the information becomes generally available.

x.The trading window shall also be applicable to any person having contractual or fiduciary relation with the company, such as auditor, accountancy firm, law firms, analysts, consultants, etc. assisting or advising the company.

xi.When the training window is open, trading by designated persons shall be subject to pre-clearance by the compliance officer, the value of the proposed trades is above such threshold as the board of Directors make stipulate. No designated person shall apply for pre-clearance of any proposed trade if such designated person is in possession of unpublished price sensitive information even if the trading window is not closed.

xii.The compliance officer shall confidentially maintain a list of such securities as a restricted list which shall be used as the basis for approving or rejecting applications for pre-clearance of trades.

xiii.Prior to approving any trades, the compliance officer shall be entitled to seek declarations to the effect that the applicant for pre-clearance is not in possession of any unpublished price sensitive information.

xiv.He shall also have regard to whether any such declaration is reasonably capable of being rendered in accurate.

xv.The code of conduct shall specify any reasonable time frame, which in any event shall not be more than 7 trading days, in which trades that have been pre-cleared have to be executed by the designated person, which fresh pre-clearance would be needed for the trades to be executed.

xvi.The code of conduct shall specify the period, which in any event shall not be less than 6 months, which a designated person who is permitted to trade shall not execute a Contra trade. The compliance officer may be empowered to grant relaxation from strict application of such restrictions for reasons to be recorded in writing provided that such relaxation does not violate these regulations. Should a Contra trade be executed, advertently or otherwise, in violation of such a restriction, profits from such trade shall be liable to be disgorged for remittance to SEBI for credit to the Investor Protection and Education Fund administrated by SEBI under the act.

xvii.The code of conduct shall stipulate such format as the board of directors deems necessary for making applications for pre-clearance, reporting of trades executed, reporting of decisions not to trade after securing pre-clearance, recording of reasons for such decisions and for reporting level of Holdings in securities at such intervals as may be determined as being necessary to monitor compliance with these regulations.

xviii.The code of conduct shall stipulate the sanctions and disciplinary actions, including wage freeze, suspension, etc. that may be imposed, by the persons required to formulate a code of conduct for the contravention of the code of conduct.

xix.The code of conduct shall specify that in case it is observed by the persons required to formulate a code of conduct, there has been a violation of these regulations they shall inform SEBI promptly.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2018, Q. 4(b) (Syllabus 2017).