The document discusses the evolution of insider trading regulations in India. It summarizes the key events and reports that led to the notification of the SEBI (Prohibition of Insider Trading) Regulations, 2015, including the constitution of the Sodhi Committee in 2013, its report to SEBI, and SEBI's approval of new regulations in 2014. The regulations, effective from May 2015, define insider trading and key terms like "insider", "connected person", and "unpublished price sensitive information (UPSI)". The regulations place restrictions on communication and trading by insiders and require various disclosures and maintenance of registers by listed companies.

2. EVOLUTION
 SEBI Constituted 18 member Committee (‘‘Sodhi Committee’’) under the
Chairmanship of Justice N.K. Sodhi, former Chief Justice of the High Courts of Kerala
and Karnataka & Former presiding office, SAT.
 Sodhi Committee report to SEBI- on December 7, 2013.
 SEBI in its Board Meeting approved the new regulations on November 19, 2014.
 SEBI (Prohibition of Insider Trading Regulations), 2015 notified on January 15, 2015.
 SEBI Insider Regulations 2015 effective from May 15, 2015.

3. Meaning of Insider Trading
 Insider trading is trading or dealing in securities based on unpublished price
sensitive information(UPSI).
 Insiders may have access to unpublished price sensitive information.
 Trading includes subscribing, buying, selling, dealing or agreeing to do any of these
activities. [Section2(l) of new regulation].
 Trading means transacting in securities whether by way of acquisition/ disposal.
[NK Sodhi Report].
 Objective of these regulations is to prohibit an insider from profiting while he is in
the possession of unpublished price sensitive information.
 To Ensure investor confidence in the market and the integrity of price discovery.

4. “COMPLIANCE OFFICER”
Maintain following registers :
Register of Insiders.
Register of forms (B, C, D)
submitted to Stock Exchanges.
Board approval for due diligence on
the Companies.
Code of fair disclosure and code of
conduct.
Reporting of non compliance to the
Board / audit committee and SEBI.
Overall compliance of the
Regulations.
Clarifications and guidance to the
insiders.
Adoption of appropriate measures
for prevention of leakage of UPSI.
means any senior
officer designated so
and reporting to Board
Responsible for

5. Important definitions in the new regulations
“CONNECTED PERSON”
 Every person in association with co. and in possession of UPSI e.g. Employees,
consultants during the six months prior to the concerned Act.
 Persons who may not occupy any position in a company but are in regular touch
with the Company and its officers e.g. Auditors, law firms, RTA.
 Deemed Insiders (relatives, holding, subsidiary, associates, entities where directors
hold > 10% etc.).
From the above it is intended to bring within its ambit those who would have access
to or could access unpublished price sensitive information about any company or
class of Companies by virtue of any connection that would put them in possession of
unpublished price sensitive information.

6. Key Definition:
"UNPUBLISHED PRICE SENSITIVE INFORMATION (UPSI)"
UPSI means any information, relating to a company or its
securities, whether directly or indirectly, that is not generally
available in the general public in relation to the following:
 "Generally available Information" means information that is accessible
to the public on a non-discriminatory basis.
Dividends
Financial
results
Change in
capital
structure
Change in
KMPs
mergers,
de-mergers,
acquisitions,
delisting,
disposals and
expansion of
business and such
other transactions
Material events in accordance with the Reg. 30 of SEBI (LODR),
2015 (Ex: Acquisition, amalgamation/ merger/ demerger/
restructuring, Revision in Rating, buyback of securities,
redemption of securities, appointment or discontinuation of
share transfer agent, Outcome of Board Meetings, amendments
in AOA & MOA, Issuance or forfeiture of securities,
cancellation of dividend and proceedings of AGM and
Extraordinary general meetings .

7. RESTRICTIONS ON COMMUNICATION AND TRADING BY INSIDERS
According to Regulation 3, it cast an obligation on all insiders who are essentially
persons in possessions of UPSI with care and to deal with the information with
them when transacting their business strictly on a need-to-know basis. It is also
intended to lead to organisations developing practices based on need-to-know
principles for treatment of information in their possession.
This regulation also prohibits any person who unlawfully procuring or
communicating any insider UPSI except for fair and reasonable
purposes or for performance of duties or discharge of legal obligations.
Further, this regulation stated that when a person who has traded in
securities has been in possession of UPSI, his trades would be
presumed to have been motivated by the knowledge and awareness of
such information in his possession and the insider may prove his
innocence by showing the circumstances.

8. TRADING PLANS
An Advance planning for trading in the securities of the Company by
the Insider (who are perpetually in possession of the UPSI) need to
satisfy the following conditions:
 Six months cooling off period.
 No trading between 20 days prior to Financial Period and closure of second
trading day after result announcement.
 Plan for minimum 12 months.
 No overlapping of trading plan.
 Set out either the value of trades or the number of securities to be traded
along with the nature and the intervals, or dates of trade.
 No requirement for mandatory six months gap between contra trade.
 No format prescribed. Trading Plan can provide for trading on reaching the
floor price, transaction on particular date, pricing formula etc.

9. TRADING PLANS
Trading plan once approved shall be irrevocable.
Trading plan to be suspended if UPSI continues till implementation.
No market abuse through trading plan.
 Trading plan to be approved by CS.
Upon approval of the trading plan, the compliance officer shall notify the plan to the
stock exchanges on which the securities are listed. Trading plan will also be disseminated
on stock exchanges website.

10. MAINTENANCE OF DISCLOSURES
The disclosures made under these regulations shall
be made only in prescribed formats and shall be
maintained by the company for a minimum period
of five years.
Compliance officer shall report to Board about
violation of rules.
The disclosure of trading in securities shall also
include trading in derivatives of securities and trade
value of the derivatives shall be taken into account
for purpose of disclosure.

11. MAINTENANCE OF DISCLOSURES
WHO WHAT WHEN
INITIAL DISCLOSURE
Promoters, Directors,
KMPs
holdings of securities
including transaction in
derivatives to the
company (in FORM B)
Within 7 days of
appointment or
becoming a promoter/
Director/KMP.
CONTINUAL
DISCLOSURES
Promoters, Directors and
Employees of the
Company
Number of securities
transacted
(within 2 Trading Days of
transaction in FORM C)
if the value of total
transactions exceeds
Rs. 10 lakhs in a
calendar quarter.

12. Format of Forms
FORM B
Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015
[Regulation 7 (1) (b) read with Regulation 6 (2)]
Name of the Company: ABC Limited
ISIN of the Company: INE123D12345
Details of Securities held by Promoter, Key Managerial Personnel (KMP), Director and other such persons as mentioned in Regulation
6(2)
Name, PAN
No., CIN/ DIN &
address with
contact nos.
Category of
Person
(Promoters/
KMP/ Director
s/ immediate
relatives/
Others etc.)
Date of
appointment
of Director
/ KMP OR
Date of
becoming
Promoter
Securities held at the
time of becoming
Promoter/ appointment
of Director/ KMP
% of
Share
holding
Open Interest of the
Future contracts held
at the time of
becoming Promoter
/ appointment of
Director/ KMP
Open Interest of
the Option held at
the time of
becoming
Promoter/ appoint
ment of
Director/ KMP
Type of
sec urity (For
eg. – Shares,
Warrants,
Convertible
Debentures
etc .)
No. Number
of units
(c ontrac
ts * lot
size)
Notional
value in
Rupee
terms
Number
of units
(c ontrac
ts * lot
size)
Notion
al value
in
Rupee
terms
Note: “ Sec urities” shall have the meaning as defined under regulation 2(1)(i) of SEBI (Prohibition of Insider Trading) Regulations,
2015.
Date: Signature:
Plac e: Designation:

13. FORM C
Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015
[Regulation 7 (2) read with Regulation 6 (2)]
Name of the Company: ABC Limited
ISIN of the Company: INE123D12345
Details of change in holding of Securities of Promoter, Employee or Director of a listed company and other such persons as mentioned
in Regulation 6(2).
Name,
PAN No.,
CIN/ DIN,
&
address
of
Promoter
/ Employ
ee /
Director
with
contact
nos.
Categor
y of
Person
(Promot
er / KMP
/
Director
s/
immedi
at e
relatives
/ others
etc.)
Securities held
prior to
acquisition/
disposal
Securities
acquired
/ Disposed
% of
shareholdin
g
Date of
allotment
advice/
acquisitio
n of
shares/
sale of
shares
specify
Date
of
intim
ation
to
comp
any
Trading in derivatives (Specify type
of contract, Futures or Options etc)Excha
nge on
which
the
trade
was
execut
ed
Buy Sell
Type of
security
(For eg.
Shares,
Warrant
Converti
ble
Debentur
e etc.)
No
Type of
security
(For eg.
Shares,
Warrants
, Converti
ble
Debentur
e, etc .)
No Pre
trans
act
ion
Post
tran
sa
ctio
n
From To
Val
ue
Number
of units
(contrac
ts * lot
size)
Val
ue
Numb
er of
units
(contr
acts *
lot
size)
Note: “ Securities” shall have the meaning as defined under regulation 2(1)(i) of SEBI (Prohibition of Insider Trading) Regulations, 2015.
Date: Signature:
Place: Designation:

14. MAINTENANCE OF DISCLOSURES
WHO WHAT WHEN
Reg. 7 (2) (b)
Every listed
Company
Intimate to the Stock
Exchange about
particulars of trading.
Within two trading
days of receipt of the
disclosure or
becoming aware of
such information.
Reg. 7 (3)
Disclosure by
connected person
The connected person
shall make disclosure
of holding and trading
in securities.
(in FORM-D or
company can have
separate formats also).
frequency as may be
determined by the
Company in order to
monitor compliance
with these
regulations.

15. FORM D
Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015
[Regulation 7 (3) Transactions by other identified persons as identified by the Company]
Name of the Company: ABC Limited
ISIN of the Company: INE123D12345
Details of change in holding of Securities of Promoter, Employee or Director of a listed company and other such persons as mentioned
in Regulation 6(2).
Note: “ Sec urities” shall have the meaning as defined under regulation 2(1)(i) of SEBI (Prohibition of Insider Trading) Regulations, 2015.
Date: Signature:
Plac e: Designation:
Name,
PAN No.,
CIN/ DIN,
&
address
of the
connect
ed
persons
as
identifie
d by the
Compan
y with
contact
nos.
Conne
ction
with
the
Comp
any
Securities held
prior to
acquisition/
disposal
Securities
acquired
/ Disposed
% of
shareholdin
g
Date of
allotment
advice/
acquisitio
n of
shares/
sale of
shares
specify
Mode
of
acquis
ition
(mark
et
purch
ase/
Public
rights/
prefer
entia l
offer /
off
marke
t/
Inter-
se
transfe
r etc.
Date
of
intim
ation
to
comp
any
Trading in derivatives (Specify type
of contract, Futures or Options etc)Exchan
ge on
which
the
trade
was
execut
ed
Buy Sell
Type of
sec urity
(For eg.
Shares,
Warrant
Converti
ble
Debentur
e etc .)
N
o
Type of
sec urity
(For eg.
Shares,
Warrants ,
Converti
ble
Debentur
e, etc .)
N
o
Pre
trans
ac t
ion
Post
tran
sa
c tio
n
From To
Val
ue
Number
of units
(c ontrac
ts * lot
size)
Val
ue
Numb
er of
units
(c ontr
ac ts *
lot
size)

16. CODE OF FAIR DISCLOSURE AND CONDUCT
Every listed Company is
mandatorily required to
formulate a policy for fair
disclosure of events and
occurrences as per the
standards set out in
Schedule and shall promptly
intimates to the Stock
Exchange regarding any
changes or amendments.
Every listed Company, market
intermediary and every other
person (handling UPSI) is
mandatorily required to
formulate a code of conduct to
regulate, monitor and report
trading by its employees as per
the standards set out in
Schedule and designate a
senior officer as Compliance
officer for administrating the
responsibilities.

17. CASE LAW (PIRAMAL ENTERPRISES)
 Piramal Enterprises Limited, (PEL) formerly Piramal Healthcare
Limited, was incorporated in 1988, having diversified businesses in
pharmaceutical, financial services and information management sectors.
 In May 2010, PEL sold its domestic healthcare business to Abbott
Laboratories for $3.72billion and accordingly, the Company and its
Directors did not announce the mandatory closure of trading window,
which allowed one of its employees to trade in the stock.
 It is necessary to ensure that UPSI is shared strictly on a need to know basis
and not communicated to others who are not involved in the transaction
irrespective of their position in the Company or relationship with
Promoters and senior management
 SEBI however, said that since the strategic sale was a price sensitive
information, the trading window should have been closed to prevent
transactions by Directors and Employees.

18. CASE LAW (PIRAMAL ENTERPRISES)
 SEBI also alleged that the Company and its Officials failed to announce the
closure of trading window on account of the information pertaining to sale
of domestic business to Abbott Laboratories.
 The Company argued before the SEBI that, the closure of trading window
by it prior to any commercial agreement being reached between Abbott and
PEL would have been counter-productive and may have adversely affected
the interests of the investors by leading to the creation of false market and
causing unnecessary speculation in the market.
 As per SEBI rules, trading window needs to be closed at the time of disposal
of business units. However, the trading window was not closed at all and
one of the employee named Harinder Sikka traded in the stock of the
Company because of trading window was not closed.
 The SEBI has fined Piramal Enterprises and five senior officials of the firm
including for violating insider trading rules with regard to the sale of its
domestic healthcare business to Abbott Laboratories and has also imposed
a fine of Rs. 6.00 lakhs on them.

19. PENAL PROVISIONS
 According to Section 15G of SEBI Act 1992, it imposes a penalty
of Rs. 25 crore or 3 times the amount of profits made out of
insider trading, whichever is higher.
 Section 24 of SEBI Act imposes imprisonment upto 10 years.
 The new Companies Act, Section 195(2) provides that a person
shall be punishable with imprisonment for a term which may
extend to 5 years or with fine which shall not be less than Rs. 5
lakhs but which may extend to Rs. 25 crore or three times the
amount of profits made out of insider trading, whichever is
higher.