On October 8, 2020, SEBI released the most recent FAQs further clarifying procedural aspects relating to the SEBI (Prohibition on Insider Trading) Regulation, 2015. These FAQs answer some of the questions that were left unanswered in the previous FAQs on insider trading released on November 4, 2019.
The FAQs covered queries regarding pre-clearances for Employee Stock Option, regulatory framework governing the trading in ADRs and GDRs by employees of Indian listed companies, information to be maintained by listed company as well as the intermediary and fiduciary in its digital databases and the data to be maintained in the Company’s records when a designated person resigns.
ON PRE-CLEARANCES FOR EMPLOYEE STOCK OPTION
SEBI has clarified that there is no pre-clearance required for exercise of Employee Stock Option. However, pre-clearance is required when for sale of shares by employees obtained after exercise of options.
TRADING IN ADRS AND GDRS
It has been clarified employees of Indian Companies (including those who are foreign nationals) that the trading in ADR and GDR need to follow the Company’s Code of Conduct on Insider Trading.
INFORMATION TO BE MAINTAIED IN STRUCTURED DIGITAL DATABASE
When a designated person is a fiduciary or intermediary (such as a law firm or mechant banker), the following information should be captured by both parties, i.e by the Listed Company in their database as well as by the fiduciary/intermediary in their own internal database:
- Details of the Unpublished Price Sensitive Information (UPSI)
- Details of persons with whom such UPSI is shared (along with their PANs/other Unique Identifier) and details of persons who have shared the information.
INFORMATION TO BE MAINTAINED ABOUT A DESIGNATED PERSON WHO RESIGNS
When a designated person resigns, the company/fiduciary/intermediary should collect all data till the last date of his service and further maintain updated address and contact details of such persons for one year after resignation from service and can preserve the aforementioned data with it for a period of 5 years. It is advised to invariably keep all the data related to a Designated Person updated.
This post has been contributed by Ms. Vaneesa Agarwal and Ms. Akshita Das.
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