Sebi overhauls norms on insider trading, delisting
SEBI has streamlined the delisting process via reverse book building
Mumbai: The Securities and Exchange Board of India (Sebi) on Wednesday decided to overhaul the entire insider trading regulations by bringing in more people under the ambit of insider trading laws in order to combat the menace of insider trading activities in the Indian equity markets. Under the new norms, an insider would include even persons connected on the basis of any contractual, fiduciary or employment relationship with the company.
This means professionals like bankers and lawyers who are connected with the company either directly or indirectly would now come under the purview of insider trading norms. Additionally, the immediate relatives of the promoter, directors or employees would also be considered as connected persons under the new regulations. “The definition of Insider has been made wider by including persons connected on the basis of being in any contractual, fiduciary or employment relationship that allows such person access to unpublished price sensitive information (UPSI). Insider will also include a person who is in possession or has access to UPSI.
Now, immediate relatives will be presumed to be connected persons, with a right to rebut the presumption,” Sebi said on Wednesday. However, Sebi said that the insider trading regulations would not come in the way of legitimate business transactions, as UPSI in such cases could be communicated with adequate safeguard. “Considering every investor’s interest in the securities markets, advance disclosure of UPSI at least 2 days prior to trading has been made mandatory in case of permitted communication of UPSI,” Sebi said.
“The new regulations have made it easier for legitimate transactions to happen in the market without actually violating the insider trading norms,” said Sandip Parikh, former ED, Sebi and founder, Finsec Law Advisors.The regulator also streamlined the delisting process through the reverse book building. “The delisting shall be considered successful only when the shareholding of the acquirer together with the shares tendered by public shareholders reaches 90 per cent of the total share capital of the company,” SEBI said. The regulator also decided to reduce the timeline for completing the delisting process from 117 working days to 76 working days.
( Source : dc correspondent )
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