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Authored by Lakshmi Rengarajan

SEBI had issued the Frequently Asked Questions (“FAQs”) on SEBI (Prevention of Insider Trading) Regulations, 2015 (“PIT Regulations”) on 08th October 2020. The FAQs provide the following clarifications on various aspects under PIT Regulations.

1. No Pre clearance required for excise of employee stock options

It is clarified that the issue and exercise of employee stock option is covered under the provision of SEBI (Share Based Employee Benefits) Regulations, 2014, hence pre clearance under PIT Regulations is not required to be complied with in case of the exercise of the option. However this exemption does not include the sale of shares by the employees after the exercise of the stock option.

2. Foreign designated persons, are required to comply with PIT regulations while trading in ADRs and GDRs

 Clarifying that the provisions of PIT Regulations, 2015 are applicable to the trading of American Depository Receipts (ADRs) and/ or Global Depository Receipts (GDRs) of an Indian Listed Company by a designated person(s) of that company who is foreign national. SEBI has clarified that such designated person(s) should also comply with the code of conduct under the PIT Regulations. Further SEBI also suggests the usage of a unique identifier analogous to PAN for the purpose of requisite disclosures in relation such foreign designated person(s).

3. Information that is to be maintained about designated person who is a fiduciary or an intermediary, in the digital database.

 With respect to designated persons who are either fiduciaries or intermediaries, SEBI has clarified to maintain the following information in the structured digital database:

(i). Details of the Unpublished Price Sensitive Information (“UPSI”);

(ii). Details of persons with whom such UPSI is shared (along with their PANs/other unique identifier) and details of persons who have shared the information.

It has also clarified that the fiduciary or intermediary of the Listed Companies should also maintain digital database internally containing the above mentioned details of designated person.

4. Collection and maintenance of information in case of a designated person who resigns from the company.

SEBI has required listed companies to make efforts to maintain updated address of a resigned designated employee for a period of one year after his resignation and preserve the data of such persons for a period of five years.

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