| Sebi board widens scope of insider definition | ||
|
Mumbai, 19 November The board of Securities and Exchange Board of India ( Sebi) on Wednesday cleared big- bang market reforms, including a move to replace the two- decade- old insider- trading rules with the new prohibition of insider trading (PIT) regulations, and amending the existing delisting regulations. Additionally, Sebi approved new reforms in consent mechanism under which it will give entities found violating securities laws the option of settling the matter before the issue of showcause notices and start of enforcement proceedings. This will be done by way of basic notices stating the probable action. The regulator, however, clarified this arrangement would be only for minor violations. According to a press statement from the market regulator, the rules around insider trading have been strengthened by clearing new definitions of unpublished price- sensitive information ( USPI), insider and connected persons. An insider would now mean a person who is in possession of or has access to price- sensitive information. The PIT regulations of 1992 defined a connected person on the basis of the position held by him; in the new regulations, the definition would include immediate relatives. Sebi's new PIT regulations are based on the recommendations of the N K Sodhi committee, which gave its report to the regulator in December last year. The regulator said any price- sensitive information could not be communicated to anyone without legitimate purposes. However, there could be cetain defence, such as if a communication was in the ordinary course of business, or an acquisition was under the Takeover Code. "Sebi would do well if these defences were reworded to provide clarity on coverage. Also, the regulator could consider whether to include additional defences based on the Sodhi committee's recommendations," said Vaneesa Abhishek, a Bombay High Court lawyer. And, companies in possession of insider information around the year are required to declare their trade plans, made well in advance, to stock exchanges. Turn to Page II, 3 > Regulator also okays consent- mechanism reforms for minor violations |Delisting regulations revamped Requires 25% public shareholders to tender shares; could make delisting harder for companies with wider shareholding |Listing agreement to be replaced with listing regulation Makes it easier to enforce, as it is no longer aprivate contract between an exchange and a company |Revamp of insider- trading norms Trading plans of promoters and directors will have to be disclosed publicly could lead to speculation |MFs allowed to launch schemes Income will increase for mutual funds which haven't met net worth requirements |Depository system revamp Single registration to ease compliance pain for participants |Changes to consent regulations Allows settlement of minor offences at initial stage |Rule changes for promoters To remove legal ambiguity on promoter reclassification; possible fundraising restrictions for wilful defaulters |Regime change for fundraising through electronic IPOs E- IPOs to cut down listing time from around two weeks, to four days. KEY MOVES AND THEIR IMPACT
|
Practising Company Secretary
Chennai
Mobile 93810 11200
__._,_.___
No comments:
Post a Comment