Insider Trading

This query is : Resolved

arpita Bisaria (Querist)
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31 July 2007 According to Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992 :

1. Do Listed Company need to make any YEARLY disclosures to Stock Exchanges as per the Regulations 13 (3) & 13 (4) ? Or only disclosures should be made if and only if there is some change in the shareholding ?

2. As per Model Code, Directors, Officers and Top Management need to make disclosures to Compliance Officer of the Company on yearly basis. Is there any prescribed form for that ? Or the Compliance Officer can obtain the same in any suitable format ?

3. As per the regulation 13(6), Company need to make initial Disclosures to the Stock Exchanges, on receipt of disclosures from the concerned person as per regulation 13(1) & 13(2). Suppose Company is in default of making such disclosures at the time of Regulation came into force, but now Company wants to make all the disclosures and rectify its mistake, then on which date Company should make the disclosures :

a. Date as on this regulation came into force (i.e. Disclosures as on year 2002), or
b. Current date, when company has decided to make the disclosures (i.e. Disclosures as on March 31, 2007)

Suppose Director Mr. X was holding 600 shares when this regulation came into force, and Company is in default for making such disclosures to SEs. And now, as on March 31, 2007, Mr. X is holding nil shares. Then the Company need to make disclosures for which period ? And if the disclosures need is to be made as on 2002 then what bout the change in holding ? Does that also need to be informed separately?

4. If the Director is holding nil share in the Company then Nil Statement is required?

Ramasubbu K

Ramasubbu K (Expert)
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15 October 2007 I will answer one by one

1. The disclosure under Regulation 13(3) and 13(4) shall be made only if there is any change in the shareholding.

2.There is no specific format for this. The Compliance officer may obtain the same in a suitable format with all the required information for the record.

3.With the permission of the Board it may be disclosed atthe current date.

4.Disclosure of holding shall be made for both holding at the date enactment and at present at the current date. Since non disclosure atracts penalty under Section 15A of the SEBI Act, it may be compounded under Section 24A of the Act. On compounding of the offence, disclosure shall be made at current date.