SEBI has by way of Notification dated June 25, 2024, (‘Amendment’), altered the provisions of the SEBI (Prohibition of Insider Trading) Regulations, 2015 (‘PIT Regulations’) pertaining to the formulation of a trading plan by persons (‘Insiders’) in possession of unpublished price sensitive information (‘UPSI’). The Amendment has amended the prescribed period between public disclosure of the plan and commencement of trading from six months to 120 calendar days. This is because companies declare their results quarterly and there exists a trading restriction, in terms of the PIT Regulations, from quarter end to two days after declaration of quarterly result, which, is generally a period of around one month for most companies. A period of 120 calendar days is considered reasonably long for UPSI that is in possession of the Insider when formulating the trading plan, to become generally available and reasonable period for a time lag in which new unpublished price sensitive information may come into being without adversely affecting the trading plan formulated earlier. Additionally, the requirement for the trading period to be at least 12 months has been omitted.

Further, trading plans are required to include parameters such as the value of trade/number of securities to be traded, nature of the trade, specific date, or time period (not exceeding five consecutive trading days) and, optionally, the upper and lower price limits for specific buy and sell trades, respectively. However, the price limits specified for buy and sell trades must be between the closing price on the day before submission of the trading plan and either 20% higher or lower than such price, respectively. Insiders are mandatorily required to implement a trading plan once approved, and any cancellation or deviation thereafter is only permitted pursuant to permanent incapacity, bankruptcy, or operation of law. Additionally, a trading plan may only be implemented once the relevant UPSI that was in possession of the insider has been made publicly available, and while trading window norms will not apply to trading plans, restrictions on contra trades will now be applicable.

The Notification also requires the compliance officer to approve or reject the trading plan within two trading days of receipt of the trading plan in addition to notifying the approved plan to the stock exchanges on which the securities are listed, on the day of approval.

The provisions of the Notification will come into force from September 24, 2024.