The SEBI (Prohibition of Insider Trading) Regulations, 2015 (Regulations) deal with control on sharing of unpublished price sensitive information (UPSI) by those who have access to it in a structured manner through the concept of Structured Digital Database (SDD) which was first introduced by the SEBI (PIT) (Amendment) Regulations, 2018 (w.e.f. April 01, 2019)
and later amended by SEBI (PIT) (Amendment) Regulations, 2020 (w.e.f. July 17, 2020).
Regulation 3(5) provides as under:
The
board of directors or
head(s) of
the
organisation of every person
required
to
handle unpublished
price
sensitive
information shall
ensure that a
structured digital database
is maintained containing
the
nature of unpublished
price sensitive
information
and the names
of
such persons
who
have
shared the information
and also the names
of such persons with
whom information
is shared
under this regulation along
with
the
Permanent Account
Number
or any
other identifier authorized by law where Permanent Account Number is not
available.
Such
database shall not be outsourced and shall be maintained internally with adequate internal controls and checks such as time stamping and
audit trails to ensure
non-tampering of the
database.
Further Regulation 9A(1) provides as under:
The Chief Executive Officer, Managing Director or such other analogous person of a listed
company, intermediary or
fiduciary shall put in place adequate and effective system of internal controls to ensure compliance with the requirements given in these regulations to
prevent insider trading.
Referring to the above, SEBI released Comprehensive FAQs on SEBI (PIT) Regulations,
2015 on 31st March, 2023,
the relevant Question and Answer is reproduced below:
5. Whether the requirement to maintain structured digital database under Regulation 3(5) is applicable
on intermediaries and fiduciaries?
Answer: The
requirement to maintain structured digital database under Regulation 3(5), containing the names of such persons or entities with whom UPSI is shared, is applicable to
listed companies, and intermediaries and fiduciaries who handle UPSI of a listed company in
the course of business operations.
Further it has
been
clarified
that
the
structured digital
database
should be
maintained internally by fiduciary
or
intermediary, capturing
information as provided
hereunder, in accordance
with Regulation 9A (2)(d) and as required under Schedule C of the Regulations.
i. Details of the Unpublished Price Sensitive Information (UPSI);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.
Fiduciaries is
referred to in Explanation to Regulation 9(2) of the Regulations as under: Professional firms such
as auditors, accountancy firms, law firms, analysts, insolvency professional entities, consultants, banks etc., assisting
or advising listed companies shall be
collectively
referred to as fiduciaries for the purpose of these Regulations.
Accordingly, the
Company Secretaries in Practice
dealing with UPSI of listed entities and
unlisted entities whose securities are proposed to be listed, by virtue
of
their position as
Fiduciaries under the Regulations are
required to ensure
compliance with the
requirement of maintaining a separate SDD internally.
It is hereby advised that the Company Secretaries in Practice should observe strict compliance
with the said requirement in order to avoid any violation under the Regulations.
Regards,
CS B.
Narasimhan
President, ICSI