The Securities and Exchange Board of India (SEBI) by a circular dated September 9, 2020 decided to extend the system driven disclosures, which were first introduced in December 2015, to the members of Promoter Group and Designated Person(s) of a listed Company in addition to the Promoter(s) and Director(s) of such Companies.

 

To begin with, the system driven disclosures shall pertain to trading in equity shares and equity derivative instruments, i.e., Futures and Options of the listed company (wherever applicable) by the entities.

 

Such disclosures shall be shared with the general public through the websites of Stock Exchanges with effect from October 01, 2020. In this respect, the Depositories and Stock Exchanges will have to make necessary arrangements for smooth implementation of the system driven disclosure process.

 

Furthermore, the new system would continue to run parallel with the existing system, i.e., the entities will continue to independently comply with the disclosure obligations under SEBI (Prohibition of Insider Trading) Regulations, 2015 as applicable to them, till March 31, 2021.

 

As presently done, the disclosures generated through the system will be displayed separately from the regular disclosures filed with the Exchanges by the Companies.

 

Steps/process required to be taken for implementation of this system driven disclosure process:

 

SEBI has specified the following steps/process that needs to be followed for the implementation of the system. In this respect, the various steps to be followed by the parties to the system such as listed companies, depositories and stock exchanges are as follows:

 

(A) Listed Companies

 

• The listed companies shall provide the information to the Designated Depositories, such as PAN of the entities in the format and manner prescribed by them. On the other hand, for PAN exempt Entities, the investor’s Demat account number will be specified by the listed Company.


• Such information needs to be provided within 10 days from the date of this circular.


• In case of any subsequent update in the details of the entities, the company shall update the information with the Designated Depository on the same day.

 

(B) Designated Depository

 

1. The designated depository shall share the information received from the listed companies with other depository.


2. Based on the PAN of First holder/Demat account number(s), the depositories shall tag such Demat accounts in their depository systems at ISIN level.


3. They shall also share company-wise details with the Stock Exchanges.


4. The depositories shall provide the following data pertaining to the tagged Demat account(s) separately to the stock exchanges on daily basis:
   • Details of transactions for pledge/revocation/invocation of shares of the entities.
   
   
   • Details of off market transactions of the entities.
   
   
   • Details of transmission of shares of the entities.
   
   
   • Details of corporate actions such as ESOPs, Bonus, Rights, etc. of the entities.
   
   
   • Additionally, details of market transfers in case of PAN Exempt entities.

 

(C) Stock Exchange

 

• The tasks of the stock exchanges is to identify the transactions done in the equity and equity derivative segment of the listed company based on the information regarding PAN provided by the depositories on a daily basis.


• Such information is then shared with other Stock Exchanges on a daily basis.


• After that the stock exchange shall consolidate the information identified by them as well as received from the stock exchanges and depositories and disclose the information triggered under SEBI (Prohibition of Insider Trading) Regulations, 2015.


• In case of any discrepancy, the issue shall be resolved by the listed company, stock exchanges and depositories in coordination with one another.