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One key change involves expanding the definition of ‘connected person’ in insider trading regulations. SEBI will now include partners and individuals sharing a household under this category.
Additionally, the term ‘immediate relative’ has been replaced with a broader definition of ‘relative,’ allowing for a more comprehensive understanding of relationships that could influence insider trading activities.
Existing Definition of ‘Relative’
- Spouse
- Parents, siblings or in-laws (including spouse’s siblings)
- Children (including stepchildren)
New Definition
Under the amended SEBI (Prohibition of Insider Trading) Regulations, 2015), the definition of a “connected person” has been broadened to include:
- Firms, along with their partners or employees, when a connected person is a partner.
- Individuals who share a household with a connected person.
SEBI clarified that no new disclosure requirements will be introduced, ensuring that the expansion of definitions does not translate into increased compliance obligations for companies and investors.
In tandem with the insider trading amendments, SEBI has also introduced investor-friendly norms regarding nominations. The regulator has raised the limit for nominees to 10, simplifying the transmission process for securities. This change is expected to facilitate smoother transitions in ownership and enhance investor confidence.
Furthermore, SEBI has mandated unique identifiers for nominees across the securities market, streamlining the identification process. However, it is important to note that legal heirs will not have rights if a nominee passes away; creditors’ claims will take precedence in such cases.
These streamlined nomination norms apply to mutual funds and demat accounts to create a more efficient and transparent framework for investors.
Also read: SEBI fines NSE Data & Analytics for multiple regulatory lapses
(Edited by : Ajay Vaishnav)
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