Sebi clarifies on process for reporting code violations

Markets regulator Sebi has announced uniformity in reporting of violations related to Code of Conduct under Sebi (Prohibition of Insider Trading) Regulations, 2015. Market regulator stated that it has been receiving various references from listed companies regarding the violations related to the code of conduct.

In its circular, the Securities and Exchange Board of India (Sebi) said, “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, the action taken and reasons thereof, etc. Such information is crucial for examining the reported violations and taking further necessary action if required.”

According to the Sebi (Prohibition of Insider Trading) Regulations, 2015, the board of directors of every listed company and market intermediary shall formulate a code of conduct to regulate, monitor and report trading by its employees and other connected persons towards achieving compliance with these regulations.

Sebi also added that with an objective to standardise the process relating to dealing with such violations of the code of conduct, all listed companies, intermediaries and fiduciaries shall report such violations by the designated persons and immediate relatives of designated persons in the standardised format to the markets regulator and 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.

The Sebi on Monday announced Amendment of guidance note on Sebi (Prohibition of Insider Trading) Regulations, 2015. “Consequent to amendment to the PIT Regulations after approval of the report submitted by the Committee on Fair Market Conduct, various clarifications have been sought by market participants on the amendments. Hence, the guidance note has been revised on July 5, 2019, to provide clarity on requirement of maintaining structured digital database and scope of “investment company”.

Securities and Exchange Board of India ( SEBI )