Summary of the SEBI (PROHIBITION OF INSIDER TRADING) (AMENDMENT) REGULATIONS, 2008

The changes brought out by the SECURITIES AND EXCHANGE BOARD OF INDIA (PROHIBITION OF INSIDER TRADING) (AMENDMENT) REGULATIONS, 2008 are as follows: -



“Insider” definition has been changed and its scope is widened. Now any person who has received or has had access to such unpublished price sensitive information will be considered to be an “Insider”. It is not necessary that he should be a connected person (subject to interpretation).


The “code of internal procedures and conduct” framed by the intermediary should not only be as near thereto the Model Code specified in Schedule I of these Regulations but it should also: -
· be without diluting it in any manner and

· the concerned intermediary should ensure the compliance of the same.



Any person who holds more than 5% shares or voting rights in any listed company shall disclose to the company, the number of shares or voting rights held by such person, on becoming such holder, within 2 working days of:-
· the receipt of intimation of allotment of shares; or

· the acquisition of shares or voting rights, as the case may be.

Earlier the time limit was 4 working days.



Any person who is a director or officer of a listed company shall disclose to the company in Form B the number of shares or voting rights held and positions taken in derivatives by such person and his dependents (as defined by the company), within two working days of becoming a director or officer of the company.
Earlier it was not necessary to disclose the positions taken by such persons in derivatives and the time limit was 4 working days.



Any person who is a director or officer of a listed company, shall disclose to the company and the stock exchange where the securities are listed in Form D, the total number of shares or voting rights held and change in shareholding or voting rights, if there has been a change in such holdings of such person and his dependents (as defined by the company) from the last disclosure made under sub-regulation (2) or under this sub-regulation, and the change exceeds Rs. 5 lakh in value or 25,000 shares or 1% of total shareholding or voting rights, whichever is lower.
Earlier the person was not under an obligation to disclose the shares of his dependant.



In Regulations 13 (5) and (6) the time limit prescribed for submission of the documents has been reduced to 2 working days.
Earlier the time limit was 4 and 5 days respectively.



A new provision for filing disclosures, required under regulation 13, through ‘electronic filing system devised by the stock exchange’ has also been inserted.
A person who violates regulation 11 he shall be liable for appropriate action under Sections 11, 11B, 11D, Chapter VIA and Section 24 of the Act.
Earlier the action was limited to 11, 11B and 24 of the Regulation.



In the model code (for listed companies): - All directors/officers /designated employees of the company and their dependents who intend to deal in the securities of the company (above a minimum threshold limit to be decided by the company) should pre-clear the transactions as per the pre-dealing procedure.
Earlier the dependents were not included. ‘Dependents’ have to be defined by the company.



In the model code (for listed companies): - All directors/officers /designated employees and their dependents shall execute their order in respect of securities of the company within one week after the approval of pre-clearance is given.
Earlier the dependents were not included. ‘Dependents’ have to be defined by the company.



In the model code (for listed companies): - All directors/ officers/ designated employees who buy or sell any number of shares of the company shall not enter into an opposite transaction i.e. sell or buy any number of shares during the next six months following the prior transaction. All directors/ officers/ designated employees shall also not take positions in derivative transactions in the shares of the company at any time. In the case of subscription in the primary market (initial public offers), the above mentioned entities shall hold their investments for a minimum period of 30 days. The holding period would commence when the securities are actually allotted.
Earlier there was no restriction entering into an opposite transaction in six months. There was also no restriction for taking derivative positions. The only restriction that existed was that the security should be held for a minimum period of 30 days.