Regulation 4 - Trading when in possession of unpublished price sensitive information - Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015

Trading when in possession of unpublished price sensitive information. 4. (1) No insider shall trade in securities that are listed or proposed to be listed on a stock exchange when in possession of unpublished price sensitive information: 1 [ Explanation - When a person who has traded in securities has been in possession of unpublished price sensitive information, his trades would be presumed to have been motivated by the knowledge and awareness of such information in his possession; ] Provided that the insider may prove his innocence by demonstrating the circumstances including the following : (i) the transaction is an off-market inter-se transfer between 2 [ insiders ] who were in possession of the same unpublished price sensitive information without being in breach of regulation 3 and both parties had made a conscious and informed trade decision; 3 [ Provided that such unpublished price sensitive information was not obtained under sub-regulation (3) of regulation 3 of these regulations. ] 4 [ Provided further that such off-market trades shall be reported by the insiders to the company within two working days. Every company shall notify the particulars of such trades to the stock exchange on which the securities are listed within two trading days from receipt of the disclosure or from becoming aware of such information. ] 5 [ (ii) the transaction was carried out through the block deal window mechanism between persons who were in possession of the unpublished price sensitive information without being in breach of regulation 3 and both parties had made a conscious and informed trade decision; Provided that such unpublished price sensitive information was not obtained by either person under sub-regulation (3) of regulation 3 of these regulations. (iii) the transaction in question was carried out pursuant to a statutory or regulatory obligation to carry out a bona fide transaction. (iv) 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. ] 6 [ (v) ] in the case of non-individual insiders: (a) the individuals who were in possession of such unpublished price sensitive information were different from the individuals taking trading decisions and such decision-making individuals were not in possession of such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 (b) 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; 6 [ (vi) ] the trades were pursuant to a trading plan set up in accordance with regulation 5. NOTE: When a person who has traded in securities has been in possession of unpublished price sensitive information, his trades would be presumed to have been motivated by the knowledge and awareness of such information in his possession. The reasons for which he trades or the purposes to which he applies the proceeds of the transactions are not intended to be relevant for determining whether a person has violated the regulation. He traded when in possession of unpublished price sensitive information is what would need to be demonstrated at the outset to bring a charge. Once this is established, it would be open to the insider to prove his innocence by demonstrating the circumstances mentioned in the proviso, failing which he would have violated the prohibition. (2) 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 the Board. (3) The Board may specify such standards and requirements, from time to time, as it may deem necessary for the purpose of these regulations. ******** Notes 1. Inserted vide SEBI/LAD-NRO/GN/2018/59 Dated 31-12-2018 w.e.f. 01-04-2019 2. Substituted vide SEBI/LAD-NRO/GN/2018/59 Dated 31-12-2018 w.e.f. 01-04-2019 before it was read as promoters 3. Inserted vide SEBI/LAD-NRO/GN/2018/59 Dated 31-12-2018 w.e.f. 01-04-2019 4. Inserted vide SEBI/LAD-NRO/GN/2018/59 Dated 31-12-2018 w.e.f. 01-04-2019 5. Inserted vide SEBI/LAD-NRO/GN/2018/59 Dated 31-12-2018 w.e.f. 01-04-2019 6. Re-numbered vide SEBI/LAD-NRO/GN/2018/59 Dated 31-12-2018 w.e.f. 01-04-2019 before it was read as (ii) and (iii)