CAIRR Update June 27, 2024

27/06/2024

Summary of the SEBI Notification dated 25/06/2024

This notification is integrated in our free-to-use website ca2013.com.

SEBI notifies the Securities and Exchange Board Of India (Prohibition Of Insider Trading) (Second Amendment) Regulations, 2024

The key highlights of the amendment are as follows:

1. Regulations entitle an insider to formulate a trading plan and present it to the Compliance officer for their approval and public disclosure. Earlier, in such case, the trading plan could not be commenced until 6 months from the public disclosure of the plan. Vide this notification, the cooling period has been reduced to 120 calendar days.
2. The restriction on trading between the twentieth trading day prior to the last day of any financial period for which results are required to be announced by the issuer of the securities and the second trading day after the disclosure of such financial results has been omitted.
3. The requirement of entailing trading for a period of not less than 12 months in a trading plan has now been omitted.
4. In addition to mentioning the value of trades to be effected/ number of securities to be traded along with nature of the trade, in the trading plan, the following parameters shall also be set out:
   – Specific date or time period for the trade not exceeding 5 consecutive trading days (Mandatory to be mentioned)
   – Upper price limit for a buy trade and lower price limit for a sell trade, the range of the price limit has been mentioned in the notification (not required to be mentioned mandatorily); The price limit shall be rounded off to the nearest numeral.

   The insider may make adjustments to the trading plan, in the number of securities and price limit with the approval of compliance officer in the event of corporate actions related to bonus issue and stock split after approval of trading plan and the same shall be notified on the stock exchanges on which securities are listed.

5. In case the insider has set a price limit for the trade, the trade shall be executed only if the execution price of the security is within the limit. If it is outside the price limit, the trade shall not be executed.
6. If due to adverse fluctuations in market price, the price of the security is outside the price limit set by the insider, the trade shall not be executed. However, if the insider wishes to trade irrespective of the fluctuation in market price, he may not set any price limit at the time of formulation of the trading plan.
7. The procedure to be followed in case of non-implementation (full/partial) of trading plan has been provided for in the notification.
8. A time limit of 2 trading days of receipt of the plan has been introduced for the compliance officer to approve or reject the trading plan and the same shall be notified to the stock exchanges on the day of approval.