SEBI (Prohibition of Insider Trading) Regulations, 2015

On 15 January 2015, the Securities and Exchange Board of India (“SEBI”) notified the SEBI (Prohibition of Insider Trading) Regulations, 2015. Some of the key features of the said regulations are:-

  • the term “insider” has been defined as a ‘connected person’ or any person who is in possession of or has access to ‘unpublished price sensitive information’ (“UPSI”);
  • in the case of connected persons the onus of establishing that they were not in possession of UPSI shall be on such connected persons, and in other cases the onus would be on the board of the company;
  • no insider is to trade in securities that are listed or proposed to be listed on a stock exchange when in possession of UPSI;
  • prohibition on communication of UPSI has been provided, except for legitimate purposes, performance of duties or discharge of legal obligations;
  • for persons who may be perpetually in possession of UPSI, an insider will be entitled to formulate a trading plan pursuant to which trades may be carried out on his behalf in accordance with such plan;
  • ‘generally available information’ has also been defined as any information that is accessible to the public on a non-discriminatory basis;
  • every listed company is to formulate and publish on its website a code of practices and procedures for fair disclosure of UPSI; and
  • the regulations will come into effect on the 120th day from the date of its publication in the official gazette.