Standardizing Reporting of violations related to Code of Conduct under SEBI (Prohibition of Insider Trading) Regulations, 2015
SEBI Circular No. SEBI/HO/ISD/ISD/CIR/P/2019/82 dated July 19, 2019 —
1. In terms of Regulation 9(1) and 9(2) of SEBI (Prohibition of Insider Trading) Regulations, 2015 (the Regulations), the Board of Directors of every listed company and the Board of Directors or head(s) of the organization of every intermediary and fiduciary are required to formulate a Code of Conduct for designated persons and their immediate relatives and monitor its compliance and promptly inform SEBI about any violations of the Code of Conduct in accordance with Clause 13 of Schedule B (in case of a listed company) or Clause 11 of Schedule C (in case of an intermediary or fiduciary) of the Regulations as applicable.
2. In compliance with the above requirement, SEBI has been receiving various references from listed companies regarding violations related to Code of Conduct under the Regulations. Many of such references provide incomplete or inadequate details about the nature of violation, designation and functional role of designated persons who have committed the violation, frequency of such violations in the past, the actions taken and reasons thereof etc. Such information is crucial for examining the reported violations and taking any further necessary action, if required.
3. Since listed companies, intermediaries and fiduciaries are empowered to take action against the designated person for violations of the respective Code of Conduct in accordance with Clause 12 of Schedule B (in case of a listed company) and Clause 10 of Schedule C (in case of an intermediary or fiduciary) of the Regulations, the aforesaid entities shall ensure that appropriate action is taken whenever such violations are observed after recording reasons in writing.
4. With an objective to standardize the process relating to dealing with such violations of the Code of Conduct, all listed companies, intermediaries and fiduciaries shall:
a. Report such violations by the designated persons and immediate relatives of designated persons in the standardized format to SEBI, as placed at Annexure A.
b. Maintain a database of the violation of code of conduct by designated persons and immediate relatives of designated persons that would entail initiation of appropriate action against them.
5. The provisions of this circular shall come into effect from the date of the circular.
6. This circular is issued in exercise of the powers conferred under Section 11(1) of the Securities and Exchange Board of India Act 1992 read with regulations 4(3) and 11 of the Regulations and to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.
7. This circular is available on SEBI website under the category "Circulars".
Report by (Name of the listed company/ Intermediary/Fiduciary) for violations related to Code of Conduct under SEBI (Prohibition of Insider Trading) Regulations, 2015.
[For listed company: Schedule B read with Regulation 9 (1) of SEBI (Prohibition of Insider Trading) Regulations, 2015
For Intermediary/ Fiduciary: Schedule C read with Regulation 9(1) and 9(2) of SEBI (Prohibition of Insider Trading) Regulations, 2015]