(1) Applicability: This circular is applicable to every
listed company, intermediary and fiduciary who are required to formulate code
of conduct.
(2) Background for the circular
a. Regulation 9(1) and 9(2)
of SEBI (Prohibition of Insider Trading) Regulations 2015 (“PIT Regulations”) requires
Board of Directors of every listed company and the Board of directors or heads
of the organization of every intermediary and fiduciary are required to
formulate a code of conduct for designated person and their immediate relatives
b. It is also their
responsibility to monitor its compliance and promptly inform SEBI about any
violations of code of conduct in
accordance with Clause 13 of Schedule B
(in case of listed company) or clause 11 of schedule C (in case of intermediary
or fiduciary)
(3) Why this
circular on standardized reporting of violations:
In this regard SEBI has been receiving references from listed companies regarding
violations of code of conduct under PIT Regulations. Many of such references provide incomplete or
inadequate details about the nature of violation, designation and
functional role of designated persons who have committed the violation,
frequency of such violations in the past, the actions taken and reasons thereof
etc. Such information is crucial for taking further actions.
With an objective to standardize the process relating to dealing
with such violations of the code of conduct, all listed companies,
intermediaries and fiduciaries shall:
a. report such violations by the
designated persons and immediate relatives of designated persons in the
standardized format to SEBI as given in this circular.
b. Maintain a database of the
violation of code of conduct by designated persons and immediate relatives of
designated persons that would entail initiation of appropriate action against
them.
This circular is applicable from July
19, 2019.
Link of SEBI Circular is as follows:
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