NEW DELHI: Trading in ADRs and GDRs of listed firms is covered under insider trading rules and employees of such firms, including foreign nationals, need to follow the code of conduct while dealing in such instruments, Sebi said in FAQs on Thursday.
For such disclosures by the designated persons, a unique identifier analogous to PAN may be used, it added.
According to Sebi, a person who is not classified as a designated person would qualify as an ‘insider’ if such person was in possession of or having access to unpublished price sensitive information (UPSI).
The insider trading norms define ‘insider’ as any person who is a connected person; or in possession of or having access to UPSI.
“Therefore, even if a person is not classified as a designated person, having access to UPSI would make such a person an ‘insider’,” Sebi said in a comprehensive frequently asked question (FAQ) on insider trading rules.
An insider is prohibited to trade while in possession of UPSI under the Sebi (Prohibition of Insider Trading) Regulations.
With respect to nominee directors sharing information to their bank or the financial institution (FI) for a legitimate purpose, Sebi said if the directors fall under the list of designated persons or as an insider, then sharing of UPSI by them for legitimate purpose with the bank/FIs, would be considered as communication of UPSI.
Accordingly, the same would be recorded in the system driven disclosure of the company, it added.
On a query on whether trading in American Depository Receipts and Global Depository Receipts by employees of Indian companies who are foreign nationals is covered under provisions of insider trading norms on code of conduct, Sebi said, “Trading in ADRs and GDRs of listed companies is covered under relevant provisions of PIT Regulations”.
“Employees of such companies, including foreign nationals, who are designated persons, shall be required to follow the code of conduct for trading in ADRs and GDRs,” Sebi said.
According to the regulator, the requirement to maintain a structured digital database 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 operation.
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