SEBI tightens rules; promoters, insiders not allowed to buy shares until June 30: Report

The Securities and Exchange Board of India (SEBI) has prohibited promoters and insiders from buying company shares between April 1 and June 30, since they have been given extra time to report returns with the stock exchanges, The Economic Times reported.

This wider window is being effected to prevent insider trading, an official told the paper.

The decision comes despite requests from promoters to be exempt from trading restrictions usually applied at the time of results, it noted.

The official added that even if the financial results are not precise “but may be indicative of the actual outcome…consequently the same may amount to unpublished price sensitive information (UPSI) and lead to insider trading.

Moneycontrol could not independently verify the report.

Insiders include promoters, directors and employees in possession of UPSI, firm auditors, accountancy firms, law firms, analysts and consultants advising a company.

Date to file Q4 and annual earnings with the exchanges was extended by SEBI from May 31 to June 30. Trading is shut from April 1 till 48 hours after declaration of the Q4 results as insiders usually are in possession of unpublished annual financials for FY20.

Companies, however, have said that this would effectively broaden the restricted window for a period of 202 days (roughly seven months) of the financial year. The restricted window is for financial results, takeovers, buybacks, dividends, mergers, expansion plans and public and rights issues.

As per SEBI norms, companies have to file results with the exchanges within 60 days of FY-end. The rules were tightened after several blue-chip results leaked on WhatsApp in 2019 even before they appeared on the stock exchanges.