SEBI (PROHIBITION OF INSIDER TRADING) REGULATION, 1992
(1) These regulations may be called the Securities and Exchange Board of India (1[Prohibition of]Insider Trading) Regulations, 1992.
(2) These regulations shall come into force on the date of the publication in the Official Gazette.
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1. Inserted by the SEBI (Insider Trading) (Amdt.) Regulations, 2002 w.e.f. 20.02.2002
In these regulations, unless the context otherwise requires;-
(a) "Act" means the Securities and Exchange Board of India, Act 1992 (15 of 1992);
(b) "body corporate" means a body corporate as defined under section 2 of the Companies Act, 1956 (1 of 1956);
(c) "connected person" means any person who-
(i) is a director, as defined in clause (13) of section 2 of the Companies Act, 1956 (1 of 1956) of a company, or is deemed to be a director of that company by virtue of sub-clause (10) of section 307 of that Act
or
(ii) occupies the position as an officer or an employee of the company or holds a position involving a professional or business relation
No insider shall -
(i) either on his own behalf or on behalf of any other person, deal in securities of a company listed on any sk exchange 1[when in possession of] of any unpublished price sensitive information;
or
2[(ii) communicate, counsel or procure, directly or indirectly, any unpublished price sensitive information to any person who while in possession of such unpublished price sensitive information shall not deal in securities.
Provided that nothing contained above shall be applicable to any communication required in the ordinary course of business 5[or profession or employment]or under any law]
2a[(iii) ***]
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3[3A. No company shall deal in the securities of another company or associate of that other company while in possession of any unpublished price sensitive information.]
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3. Inserted by the SEBI (Insider Trading) (Amdt.) Regulations, 2002 w.e.f. 20.02.2002
In a proceeding against a company in respect of regulation 3A, it shall be a defence to prove that it entered into a transaction in the securities of a listed company when the unpublished price sensitive information was in the possession of an officer or employee of the company, if:
(a) the decision to enter into the transaction or agreement was taken on its behalf by a person or persons other than that officer or employee; and
(b) such company has put in place such systems and procedures which demarcate the activities of the company in such a way that the person who enters into transaction in securities on behalf of the company cannot have access to information which is in possession of other officer or employee of the company; and
(c) it had in operation at that time, arrangements that could
Any insider, who deals in securities 4[***] in contravention of the provisions of regulation 3 3[or 3A] shall be guilty of Insider trading.
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3. Inserted by the SEBI (Insider Trading) (Amdt.) Regulations, 2002 w.e.f. 20.02.2002
4. The words communicates any information or counsels any person dealing in securities omitted by SEBI (Insider Trading) (Amdt.) Regulations, 2002 w.e.f. 20.02.2002
(1) If the Board suspects that any person has violated any provision of these regulations, it may make inquiries with such persons or any other person as mentioned in clause (i) of sub-section (2) of Section 11 as deemed fit, to form a prima facie opinion as to whether there is any violation of these regulations.
(2) The Board may appoint one or more officers to inspect the books and records of insider(s) or any other persons as mentioned in clause (i) of sub-section (2) of Section 11 for the purpose of sub-regulation (1).]
Board's right to investigate
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1. Inserted by the SEBI (Insider Trading) (Amdt.) Regulations w.e.f. 20.02.2002
.(1) Where the Board, 2[is of prima facie opinion] that it is necessary to investigate and inspect the books of account, other records and documents of an insider 1[or any other person mentioned in clause (i) of sub-section (1) of section 11 of the Act] for any of the purposes specified in sub-regulation (2), it may appoint an investigating authority for the said purpose.
(2) The purposes referred to in sub-regulation (1) may be as follows :
(a) to investigate into the complaints received from investors, intermediaries or any other person on any matter having a bearing on the allegations of insider trading; and
(b) to investigate suo-moto upon its own knowledge or information in its possession to protect the interest of investors in securities against breach of these regulations.
(1) Before undertaking an investigation under regulation 5 the Board shall give a reasonable notice to insider for that purpose.
(2) Notwithstanding anything contained in sub-regulation (1), where the Board is satisfied that in the interest of investors or in public interest no such notice should be given, it may by an order in writing direct that the investigation be taken up without such notice.
(3) On being empowered by the Board, the investigating authority shall undertake the investigation and inspection of books of accounts and insider 1[or any other person mentioned in clause (i) of sub-section (1) of section 11 of the Act] against whom an investigation is being carried out shall be bound to discharge his obligations as provided in regulation 7 .
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.(1) It shall be the duty of every insider, who is being investigated, 1[or any other person mentioned in clause (i) of sub-section (1) of section 11 of the Act] to produce to the investigating authority such books, accounts and other documents in his custody or control and furnish the authority with the statements and information relating to the transactions in securities market within such time as the said authority may require.
(2) The insider 1[or any other person mentioned in clause (i) of sub-section (1) of section 11 of the Act] shall allow the investigating authority to have reasonable access to the premises occupied by such insider and also extend reasonable facility for examining any books, records, documents and computer data in his possession of the sk- broker or any other person and also provide copies of documents or other materials which, in the opinion of the inves
The investigating authority shall, within 3[reasonable in time]of the conclusion of the investigation submit an investigation report to the Board.
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3. Substituted for the words “one month” by the SEBI (Insider Trading) (Amdt.) Regulations w.e.f. 20.02.2002
4[9(1) The Board shall, after consideration of the investigation report communicate the findings to the person suspected to be involved in insider trading or violation of these regulations.
(2) The person to whom such findings has been communicated shall reply to the same within 21 days; and
(3) On receipt of such a reply or explanation, if any, from such person, the Board may take such measures as it deems fit to protect the interests of the investors and in the interests of the securities market and for the due compliance of the provisions of the Act, the Regulations made thereunder including the issue of directions under regulation 11.]
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4. Substituted by the SEBI (Insider Trading) (Amdt.) Regulations, 2002
Notwithstanding anything contained in 1[regulation 4A and] regulation 5 , the Board may appoint a qualified auditor to investigate into the books of account or the affairs of the insider 1[or any other person mentioned in clause (i) of sub-section (1) of section 11 of the Act];
Provided that, the auditor so appointed shall have the same powers of the inspecting authority as stated in regulation 5 and the insider shall have the obligations specified in regulation 7 .
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1. Inserted by the SEBI (Insider Trading) (Amdt.) Regulations w.e.f. 20.02.2002
5[11 - The Board may without prejudice to its right to initiate criminal prosecution under section 24 or any action under Chapter VIA of the Act, to protect the interests of investors and in the interests of the securities market and for due compliance with the provisions of the Act, Regulations made thereunder issue any or all of the following order, namely:-
(a). directing the insider or such person as mentioned in clause (i) of sub-section (2) of section 11 of the Act not to deal in securities in any particular manner;
(b). prohibiting the insider or such person as mentioned in clause ( i ) of sub-section (2) of section 11 of the Act from disposing of any of the securities acquired in violation of these Regulations;
(c). restraining the insider to communicate or counsel any person to deal
A summons or notice issued by the Board under these regulations may be served in the manner provided in regulation 22 of the Securities and Exchange Board of India (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002.]
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6. Inserted by the Securities and Exchange Board of India (Manner of Service of Summons and Notices issued by the Board) (Amendment) Regulations, 2007, Notification No. SEBI/LAD/DOP/2232/2007 dated 23.04.2007.
(1) All lised companies and organisations associated with securities markets including:
(a) the intermediaries as mentioned in section 12 of the Act, asset management company and trustees of mutual funds;
(b) the self regulatory organisations recognised or authorised by the Board;
(c) the recognised sk exchanges and clearing house or corporations;
(d) the public financial institutions as defined in Section 4A of the Companies Act, 1956; and
(e) the professional firms such as auditors, accountancy firms, law firms, analysts, consultants, etc., assisting or advising listed companies,
shall frame a code of internal procedures and conduct as near there to the
(1) Any person who holds more than 5% shares or voting rights in any listed company shall disclose to the company 8[in Form A], the number of shares or voting rights held by such person, on becoming such holder, within 4 working days of:-
a. the receipt of intimation of allotment of shares; or
b. the acquisition of shares or voting rights, as the case may be.
(2) Any person who is a director or officer of a listed company, shall disclose to the company 8[in Form B], the number of shares or voting rights held by such person, within 4 working days of becoming a director or officer of the company.
11[(2A) Any person who is a promoter or part of promoter group of a listed company shall disclose to the company in Form B the number of shares or voting
(1) A person who violates provisions of regulation 12 shall be liable for action under Section 11 or 11 B and/or Section 24 of the Act.
(2)A person who violates provisions of regulation 13 shall be liable for action as specified in regulation 11 or Sections 11, 11B or action under Chapter VIA or section 24 of the Act.]
Any person aggrieved by an order of the Board under these regulations may prefer an appeal to the Securities Appellate Tribunal]
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2. Regulation 12 renumbered as Reglation 15 and substituted by SEBI (Insider Trading) (Amdt) Regulations, 2002 w.e.f. 20.02.2002. Prior to substitution Regulation 12 read as under :
1[SCHEDULE I
[Under regulation 12(1)]
PART A
Model Code of Conduct for Prevention of Insider Trading for Listed Companies
1.0 Compliance Officer
1.1 The listed company has appointed a compliance officer (senior level employee) who shall report to the Managing Director/Chief Executive Officer.
1.2 The compliance officer shall be responsible for setting forth policies, procedures, monitoring adherence to the rules for the preservation of "Price Sensitive Information", pre-clearing of designated employees and their dependents trades (directly or through respective department heads as decided by the company), monitoring of trades and the implem
SCHEDULE II
[see under regulation 12(2) ]
CODE OF CORPORATE DISCLOSURE PRACTICES FOR PREVENTION OF INSIDER TRADING
1.0 Corporate Disclosure Policy
1.1 To ensure timely and adequate disclosure of price sensitive information, the following norms shall be followed by listed companies:-
2.0 Prompt disclosure of price sensitive information
2.1 Price sensitive information shall be given by listed companies to sk exchanges and disseminated on a continuous and immediate basis.
2.2 Listed companies may also consider ways of supplementing information released to sk exchanges by improving investor access to their p
8[SCHEDULE III
FORMS
FORM A
Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992 (Regulation 13 (1) and (6)
Regulation 13(1) -- Details of acquisition of 5% or more shares in a listed company
Name & address of shareholder with telephone number Shareholding prior to acquisition No. and percent age of shares /voting rights acquired Date of receipt of allotment /advice. Date of acquisition (specify) Date of intimation to Company
Mode of acquisition (market purchase/public/ rights/ preferential offer etc.) Shareholding subsequen
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