Source: www.sebi.gov.in
Background:
The Securities and Exchange Board of India (hereinafter referred as ‘SEBI’), vide circular[1] dated December 01, 2015, had introduced system-driven disclosures in securities market detailing the procedure to be adopted for its implementation. The procedure was further streamlined vide SEBI circular[2] dated December 21, 2016 to ensure that the depositories provide the transaction data of promoters/ promoter group on a daily basis directly to the stock exchanges for dissemination of the necessary disclosures.
Implementation of the system:
The proposal regarding system-driven disclosures in the market has been proposed to be implemented in phases. The first phase has seen the implementation of the disclosures of promoter/promoter group under the following regulations:
- SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011
- SEBI (Prohibition of Insider Trading) Regulations, 2015
Second Phase:
In furtherance to the above, SEBI vide circular[3] May 28, 2018 has proposed to implement the next phase of the system wherein SEBI has also enlisted the steps that are required to be taken for implementation of the second phase. Further, in the second phase, the following additional disclosures have been proposed to be implemented:
- Disclosures under Regulation 29 (1) and 29 (2) of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 by non-promoters; and
- Disclosures under Regulation 7 (2) of the SEBI (Prohibition of Insider Trading) Regulations, 2015, pertaining to directors and employees of the company.
Applicability of this circular:
- SEBI has specified that the disclosures under Regulation 29 (1) and 29 (2) of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 by non-promoters shall not be applied to a scheduled commercial bank or public financial institution as pledgee irrespective of whether such a pledge is for securing indebtedness in the ordinary course of business or not.
- SEBI has also specified that with respect to the disclosures under Regulation 7(2) of the SEBI (Prohibition of Insider Trading) Regulations, 2015 pertaining to directors and employees of the company, the CEO and up to two levels below CEO of a company shall be deemed as employees for the purpose of system-driven disclosures.
Parallel system:
SEBI has specified that this system will continue to run in parallel with the existing system. This essentially means that all the entities shall continue to comply with the disclosure obligations under SAST Regulations and PIT Regulations as applicable to them.
Disclosures on the websites of Stock Exchanges:
SEBI has also instructed that the Depositories and Stock Exchanges to make necessary arrangements so that the above-mentioned disclosures are displayed on the websites of respective stock exchanges from August 01, 2018.
[1]Available at: https://www.sebi.gov.in/legal/circulars/dec-2015/introduction-of-system-driven-disclosures-in-
securities-market_31159.html
[2]Available at: https://www.sebi.gov.in/legal/circulars/dec-2016/system-driven-disclosures-in-securities-market_33844.html
[3]Available at: https://www.sebi.gov.in/legal/circulars/may-2018/system-driven-disclosures-in-securities-market_39066.html