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Sebi unveils stringent insider trading norms.

By Mail Today Bureau in Mumbai THE Securities and Exchange Board of India ( Sebi) approved a new set of stringent insider trading rules which will replace a two- decade- old law that was not considered adequate for checking such violation.

The market regulator also cleared a proposal to impose restrictions on wilful defaulters raising funds from capital markets, and new listing regulations and norms for settlement proceedings.

The new rules broaden the scope of who can be held liable for insider trading and require company officials to make more transparent disclosures of their trading activities. The rules strengthen the legal and enforcement framework, align Indian regime with international practices, provide clarity with respect to the definitions and concepts, and facilitate legitimate business transactions, Sebi said in a statement after its Board meeting.

Sebi has expanded the definition of ' insider' to include persons connected on the basis of being in any contractual, fiduciary or employment relationship that allows such people access to unpublished price sensitive information ( UPSI). Under the new framework, Sebi has defined a connected person in the context of insider trading activities. A connected person would be someone who is or has during the past six months prior to the concerned act has been associated with a company directly or indirectly.

Besides, immediate relatives of connected persons would also come under the same category unless they prove that they were not privy to unpublished price sensitive information. The onus of establishing that they were not in possession of UPSI would be with the connected persons.

To protect the interest of investors, companies would be now mandatorily be required to disclose UPSI, at least, two days prior to trading in case of permitted communication of such information. Sebi also approved new delisting rules responding to concerns by participants that current regulations make the process of buying out minority shareholders difficult and expensive.

Time for delisting reduced from 117 working days to 76

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Publication:Mail Today (New Delhi, India)
Date:Nov 20, 2014
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