SEBI has issued a Consultation Paper on proposed amendments to the SEBI (Prohibition of Insider Trading) Regulations, 2015 to rationalize the scope of the expression ‘connected person’, while not increasing compliance requirements. The connected person is redefined as follows:
- Any person who is or has been, during the six months prior to the concerned act, associated with a company; in any capacity, directly or indirectly, including by reason of frequent communication with its officers or by being in any contractual, fiduciary or employment relationship or by being a director, officer or an employee of the company or holds any position including a professional or business relationship, whether temporary or permanent, with the company, that allows such a person, directly or indirectly, access to unpublished price sensitive information or is reasonably expected to allow such access.
- Without prejudice to the generality of the foregoing, the persons falling within the following categories shall be deemed to be connected persons unless the contrary is established,-(a) a relative of connected persons specified in clause (i); or (b)a holding company or associate company or subsidiary company; or(c)an intermediary as specified in section 12 of the Actor an employee or director thereof; or(d)an investment company, trustee company, asset management company or an employee or director thereof; or (e)an official of a stock exchange or of clearing house or corporation; or(f)a member of board of trustees of a mutual fund or a member of the board of directors of the asset management company of a mutual fund or is an employee thereof; or (g)a member of the board of directors or an employee, of a public financial institution as defined in section 2 (72) of the Companies Act,2013; or(h)an official or an employee of a self-regulatory organization recognised or authorized by the Board; or(i)a banker of the company; or (j)a concern, firm, Trust, Hindu undivided family, company or association of persons wherein a director of a company or his immediate relative or banker of the company, has more than ten percent of the holding or interest; or(k)a firm, its partner or its employee in which a connected person specified in clause (i) is also a partner; or(l)any person on whose advice, directions or instructions, a connected person specified in clause (i) is accustomed to act; or(m)a body corporate whose board of directors, managing director or manager is accustomed to act in accordance with the advice, directions or instructions of a connected person specified in clause (i); or(n)persons sharing household or residence with a connected person specified in clause (i); or(o)persons having material financial relationship with a connected person specified in clause (i) including for reasons of employment or financial dependency or frequent financial transactions; or (p) a Hindu Undivided Family (HUF) where Karta or any of the member/coparcener is a connected person.
The comments along with rationale may be submitted by any of the following modes latest by August 18, 2024 online.
