Code of Conduct for Prevention of Insider Trading
What is Insider Trading?
Trading or disclosing information for trading in Company’s securities by Company’s management, consultants or employees i.e. Insiders based on the confidential information which they carry in their official capacity.
Aspects behind prohibition of Insider trading
- Similar to Match fixing in Cricket
- Leads to unjust enrichment of few people who are related to the Company
- Employees take undue advantage of their positions and the company information they carry
- Injustice on external people as they do not have access to such confidential information
Insider Trading – Important Terms
Insider Trading
Buying or Selling in Company’s securities by Designated Employees either through themselves or through their friends/relatives based on the Unpublished Price Sensitive Information (UPSI) which he carries.
Designated Employees
Employees who are presumed to have access to Unpublished Price Sensitive Information (UPSI) in their official capacity.
Examples –
- Financial results of the Company
- Intended declaration of dividends
- Bonus issue or buy-back of securities
- Any major expansion plans or execution of new projects
- M&A activities
- Disposal of whole or substantial part of the undertaking
- Significant changes in policies, plans or operations of the company
- Significant Management changes
Applicable Regulations
- SEBI (Prohibition of Insider Trading) Regulations, 2015
- Company Code of Conduct for Prevention of Insider Trading
Who are Covered
All Employees (includes permanent and contractual employees and trainees) of the Company and its Subsidiaries
Designated Employees and their Spouses (including their dependents)
Board of Directors of the Company and its subsidiaries
All Connected Persons such as the Consultants, Auditors, other subject matter experts and such
Who are Designated Employees?
- Select Employees of the Company or it Subsidiaries based on their job profile and possible possession of Unpublished Price Sensitive Information of the Company.
- For limited duration or on a continuous basis, as the case may be
Duties of Employees and Designated Employees
- It is the duty of every employee to ensure that he/she is abiding the provisions of the Code of Conduct for Prevention of Insider Trading
- Any change in designation/role/reporting/grade/project may bring the employee within the purview of the definition of the Designated Employee
- Therefore the employees are requested to keep a check on any changes in these parameters for applicability of this Code and compliances thereafter
- Should obtain pre-clearance from the Compliance Officer before dealing in the Securities of the Company beyond Rs. 10 Lakhs in a calendar quarter
- Should make disclosures to the Compliance Officer in prescribed formats within two trading days of such transaction
- Employees should not
- deal in Securities when in possession of any Unpublished Price Sensitive Information
- solicit or procure Unpublished Price Sensitive Information
- communicate, counsel or pass on any Unpublished Price Sensitive Information to any person with recommendation to buy or sell or not to buy or not to sell the Securities of the Company
- Employees should maintain confidentiality of Unpublished Price Sensitive Information (UPSI)
Duties of Designated Employees
- Apart from restrictions applicable to All Employees, additionally Designated Employees
- Cannot deal in Shares of the Company when Trading Window is closed
- Should not carry out any reciprocal transaction for 6 months
- Should obtain pre-clearance from the Compliance Officer before dealing in the Securities of the Company beyond Rs. 10 Lakhs in a calendar quarter
- Should make disclosures to the Compliance Officer in prescribed formats within two trading days of such transaction
Questions before Trading for Employees
Does the value exceed Rs. 10 lakhs in a calendar quarter for the shares I have traded in?
In the event it does exceed the amount, have I got the pre-clearance approval from the Compliance Officer of the Company?
Have I made a disclosure of shares traded within 2 trading days to the Compliance Officer in the prescribed format i.e. Form C?
Am I a Designated Employee as on the date of the transaction?
Am I trading during Closure of Trading Window
Have I entered into Reciprocal Transaction during the last 6 months?
Penalty for Contravention
Action by the Company
Penalty, salary freeze, deduction of performance pay, suspension, ineligibility for future participation in ESOP Schemes, termination of employment/position etc.
Action by SEBI, in addition to the above:
- A fine of not less than Rs. 10 Lakhs or three times the amount of profits made out of the insider trading, whichever is higher. The fine may extend to Rs. 25 Crores
- SEBI can pass an order restraining the Company from entering into the market for any transaction for a certain period of time
For further assistance, contact:
Company Secretary and Compliance Officer
or reach us at insidertrading_compliance@persistent.com
Please contact without fail before dealing in Company shares
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