SEBI has amended the SEBI (Prohibition of Insider Trading) Regulations, 2015 to prescribe the maintenance of a structured digital database of unpublished price sensitive information (UPSI) and remittance of amounts collected on account of violation of the Code of Conduct to the Investor Protection and Education Fund, among others. Specifically, the amendments made are as follows :

• Regulation 3(5) pertaining to Communication or procurement of UPSI has been substituted to provide that the Board of Directors /Head(s) of the organisation of every person required to handle UPSI shall ensure that a structured digital database is maintained. This database shall contain the nature of UPSI, the names of persons who have shared the information and the names of such persons with whom information is shared, along with the Permanent Account Number or any other identifier authorized by law . Such a 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.

A new sub-regulation 6 provides that the aforesaid database is preserved for a period of not less than eight years after completion of the relevant transactions and in the event of receipt of any information from the Board regarding any investigation or enforcement proceedings, the relevant information in the structured digital database shall be preserved till the completion of such proceedings.

• With respect to continual disclosures by the promoter or any other connected person under regulation 7, a new clause (c) in sub-regulation (2) provides that such continual disclosures shall be in the mode and manner prescribed by the Board from time to time.

• With respect to the Code of Conduct required to be formulated under Regulation 9, Clause 12 of Schedule B and clause 10 of Schedule C have been substituted to provide that without prejudice to the power of the Board, the code of conduct shall stipulate the sanctions and disciplinary actions, including wage freeze, suspension, recovery, etc., that may be imposed by the listed company for contravention of the code of conduct. Any amount collected under this clause shall be remitted to the Board for credit to the Investor Protection and Education Fund administered by the Board under the Act. The Code shall also stipulate that in case of its violation the persons required to formulate the Code shall promptly inform the stock exchange in the manner specified by the Board

To refer to the SEBI (Prohibition of Insider Trading) (Amendment) Regulations 2020, dated 17 July 2020, click here.