A note on the Insolvency and Bankruptcy Code, 2016

Introduction

The National Company Law Tribunal (“NCLT”), Mumbai Bench, on 18 January 2017 passed an order allowing the first application filed under the Insolvency and Bankruptcy Code, 2016. The said application (“Creditor Petition”) was filed by ICICI Bank under section 7 of the Insolvency and Bankruptcy Code, 2016 (“the Code”). Section 7 provides for initiation of corporate insolvency resolution process by a creditor against a corporate debtor. During the pendency of the said Creditor Petition, the corporate debtor therein filed an interim application, stating that on the date of filing of the Creditor Petition, the liabilities and debts of the debtor were suspended pursuant to an order of the Industry, Labour and Energy Department of Maharashtra. Such order was given by the department under the Maharashtra Relief Undertaking Act, (“MRU Act”) to provide financial assistance to the debtor and as a measure to prevent unemployment. It was argued by the debtor that by virtue of such order a proceeding under the Code cannot be initiated against the debtor. The NCLT while deciding the issue observed that the Code has come into existence subsequent to the MRU Act, and shall prevail over any other law in force. The Bench further observed that a proceeding under the Code shall not cause unemployment and even in the event of liquidation, the rights of the employees will be sufficiently protected. Therefore it was held by the Bench that the order under the MRU Act will not be a bar to pass an order under section 7 of the Code.[i] Thus an order of Moratorium in the said Creditor Petition was passed and directions to initiate the corporate insolvency resolution process under the Code, were given. The direction under the moratorium included prohibition and/or stay of proceedings against the debtor under any other law in force, including the SARFAESI Act.

Context of the Bankruptcy Code

The various laws that dealt with insolvencies and bankruptcies before the commencement of the Code are:

  • Presidency Towns Insolvency Act, 1909 – to deal with bankruptcy of individuals in the presidential towns of Bombay, Calcutta and Madras.
  • Provincial Insolvency Act, 1920 – to deal with bankruptcy of individuals in the rest of India.

Insolvency for companies is dealt with under the following legislations:

  • Companies Act, 2013 (the “Companies Act”)/ Companies Act , 1956
  • Sick Industrial Companies Act, 1985 (the “SICA”)
  • Recovery of Debt Due to Banks and Financial Institutions Act, 1993 (the “RDDBFI Act”)
  • Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“SARFAESI”).

With the existence of these overlapping legislations and adjudicating forums, the insolvency proceedings were usually met with systemic delays and inefficiencies. The creditors were unable to get a timely recovery and reorganisation of their assets.

It was in this background that the Bankruptcy Law Reforms Committee (BLRC) was established on 22 August 2014 for providing an entrepreneur friendly legal bankruptcy framework as was announced in the Budget Speech (2014-15). “The Government also identified Bankruptcy Law Reform as a key priority for improving the ease of doing business and had announced in the Budget Speech 2015-16 that a comprehensive Bankruptcy Code, ‘meeting global standards and providing necessary judicial capacity’, will be brought in the year 2015-16.”[ii]

Accordingly, the BLRC submitted its Report and draft Bill on 4 November 2015. Based on the report, as well as public/stakeholder consultations, the Insolvency and Bankruptcy Code, 2015 was finalized. The Bill was introduced in the Lok Sabha on 21 December 2015 and referred to a Joint Committee of Parliament on 23 December 2015. The Joint Committee of Parliament submitted its report on 28 April 2016.The Insolvency and Bankruptcy Code, 2016 was passed by the Lok Sabha on 5 May 2015 and by the Rajya Sabha on 11 May 2016 and published in the Official Gazette on 28 May 2016.

Objective of the Code

The Code aims “to consolidate and amend the laws relating to reorganization and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner and for maximization of value of assets of such persons and matters connected therewith or incidental thereto.” [iii]

“The present code is the result of the various reforms undertaken by the government to effectuate insolvency in India. This measure is expected to provide a greater clarity in law and facilitate the application of a consistent and comprehensive mechanism to different stakeholders affected by financial failure or inability to pay debt”.[iv]

Structure of the Code

The Code is divided into 5 parts and has 11 schedules which include amendments to different legislations.

Part I – Preliminary;

Part II – Insolvency Resolution of Corporate Persons;

Part III – Insolvency Resolution of Individuals and Partnership Firms;

Part IV – Regulation of Insolvency Professionals, Agencies and Information Utilities;

Part V – Miscellaneous.

Key Features of the Code

1. Two-stage Process for Dealing with Defaulting Debtors

The Code lays down two independent stages for insolvency resolution: a) The Insolvency Resolution Process, during which financial creditors assess whether the debtor’s business is viable to continue and the options for its rescue and revival; and b) Liquidation, if the insolvency resolution process fails or financial creditors decide to wind down and distribute the assets of the debtor.

1.1 The Insolvency Resolution Process (“IRP”)

“The IRP provides a collective mechanism to creditors to deal with the overall distressed position of a corporate debtor. This Code is a significant departure from the existing legal framework under which the primary onus to initiate a reorganisation process lies with the debtor, and lenders may pursue distinct actions for recovery, security enforcement and debt restructuring.”[v] Further, there is a timeline of 180 days to complete the IRP, which may under exceptional circumstances, be extended for a further period of 90 days.[vi]

The Code lays down the following steps in the IRP[vii]:

i) Initiation of Proceedings at NCLT: An IRP against a corporate debtor can be initiated by filing an application at the National Company Law Tribunal (NCLT). The defaulting corporate debtor, its shareholders or employees, may also initiate voluntary insolvency proceedings. The court has to, within 14 days of the receipt of the application ascertain the existence of default and accordingly admit or reject the application.

ii) The following persons may make an application under the Code:

  1. Financial Creditor (u/s 7 of the Code)
  2. Operational Creditor (u/s 9 of the Code)
  3. Defaulting Debtor (u/s 10 of the Code)

Where an operational creditor makes an application he has to submit the proof of default and also obtain a certificate from the financial institution with whom the debtor maintains his accounts. Such certificate must declare that no payment has been made towards the unpaid debt. The NCLT may in the absence of such certificate or any other requisite document, reject the application for commencing IRP.[viii]

iii) Moratorium: Once existence of default is ascertained and application is admitted, the NCLT shall order a moratorium on the debtor’s operations for the period of the IRP. During this period no judicial proceedings for recovery, enforcement of security interest, sale or transfer of assets, or termination of essential contracts can take place against the debtor.

iv) Appointment of Resolution Professional: The NCLT shall appoint an insolvency professional to conduct the IRP. The Insolvency Professional’s primary function is to take over the management of the corporate debtor and operate its business as a going concern under the broad directions of a committee of creditors. Therefore, the impetus of the Code is to allow a shift of control from the defaulting debtor’s management to its creditors, where the creditors drive the business of the debtor with the Resolution Professional acting as their agent. This is similar to the approach under the UK insolvency laws.

v) Creditors Committee: The Insolvency Professional shall identify the financial creditors and constitute a creditors committee. Operational creditors having more than 10% of the debt as outstanding are also invited to attend the meetings of the committee but do not have a right to vote. Each decision of the creditors committee requires a 75% majority vote. Decisions of the creditors committee are binding on the corporate debtor and all its creditors. The creditors committee considers proposals for the revival of the debtor and must decide whether to proceed with a revival plan or liquidation within a period of 180 days (subject to an extension of 90 days under exceptional circumstances).

1.2 Liquidation

If the IRP fails, or during the IRP the creditors decide to liquidate the debtor company, an application can be made for the same and the NCLT may pass an order accordingly. Such application can also be made by the corporate debtor or any other person affected by the revival plan arrived at in the IRP.

Once the NCLT passes an order of liquidation, a moratorium is imposed on the pending legal proceedings against the corporate debtor, and the assets of the debtor (including the proceeds of liquidation) vest in the liquidation estate.

2. Institutional Framework

2.1 The Insolvency Regulator: The Code provides for the constitution of an insolvency regulator i.e., the Insolvency and Bankruptcy Board of India (Board).Its role includes: (i) regulating the conduct of the insolvency professionals, insolvency professional agencies and information utilities; (ii) regulating the insolvency process.

2.2 Insolvency Professionals: The Code provides for insolvency professionals to undertake the IRP. These professionals are instrumental in the efficient resolution of insolvency. The Code contemplates insolvency professionals as a class of regulated but private professionals having minimum standards of professional and ethical conduct. Developing of such standards is the role of the Insolvency Regulator. In the resolution process, the role of the insolvency professional is to verify the claims of the creditors, constitute a creditors committee, run the debtor’s business during the moratorium’ period and help the creditors in finalising a revival plan. The Insolvency Professional is to act as an agent of the creditors during the resolution period.

2.3 Information Utilities: The Code provides for creation of Information Utilities to collect, collate, authenticate and disseminate financial information of debtors in centralised electronic databases. The Code requires creditors to provide financial information of debtors to multiple utilities on an ongoing basis. Such information shall be available to creditors, resolution professionals, liquidators and other stakeholders in insolvency and bankruptcy proceedings. The purpose of this is to remove the delay in proceedings caused due to unavailability or restricted access to information about the debtor.

2.4 Adjudicating Authorities: The adjudicating authorities for corporate insolvency and liquidation are the NCLT and its respective appellate authority. For individuals and other persons, the adjudicating authority is the DRT and its respective appellate authority. This distinguished the jurisdictions of the various forums and deals with the problem of overlapping jurisdictions.

3. Individuals and partnerships

The Code provides for a different mechanism for insolvency of individuals and unlimited liability partnerships. The Code provides for two distinct processes to deal with insolvency of individuals/partnership firms:

3.1 Fresh Start Process: Where the aggregate value of qualifying debts does not exceed INR 35,000 and the debtor satisfies such other conditions as laid down in section 80(2) of the Code, the debtor may make an application for a fresh start. Such application is made for discharge of debts not exceeding INR 35,000 and to give the individual an opportunity for starting afresh. Chapter II of Part III contains provisions for fresh start applications.

3.2 Insolvency Resolution Process: The insolvency resolution process consists of preparation of a repayment plan by the debtor, for approval of creditors. If approved, the DRT shall pass an order binding the debtor and creditors to the repayment plan. If the plan is rejected or fails, the debtor or creditors may apply for a bankruptcy order.

4. Priority of Claims

The Code brings about a major shift in the priority of claims in liquidation proceedings. While the costs of insolvency resolution have to be paid out first, the next priority is given to the dues of the secured creditors and workmen for the preceding 24 months. Central and State Government dues rank below the claims of secured creditors, workmen dues, employee dues and other unsecured financial creditors.[ix] Under the earlier law, Government dues were immediately below the claims of secured creditors and workmen in order of priority.

5. The Code repeals the two legislations dealing with bankruptcy of Individuals thereby undertaking to regulate the proceedings of bankruptcy of Individuals.[x] (These sections have not yet been notified)

6. The Code provides for enforcement of its provisions in cases of cross border insolvency provided that the Government of India enters into agreements with other countries for the same. This is the first step towards recognising cross border insolvency proceedings.[xi] (These sections have not yet been notified)

Concerns about the Code

1. While the main aim of the Code is to provide uniform, adequate and speedy insolvency resolution process it is argued that the Code is titled in favour of the creditors and does not sufficiently protect the interests of the debtors.

2. Even though the Code has touched upon the subject of cross border insolvency, it does not provide for any mechanism to deal with cross border insolvencies and merely states that its provisions thereof may apply if the Government enters into an agreement with the foreign countries for the same.

3. The lack of structural capacity to handle the cases is critical to the successful implementation of the Code. The NCLT will be overburdened with cases from the Company Law Board and the DRT. This would result in delayed adjudication which ultimately strikes the purpose of the Code.

4. The Insolvency professionals (“IP”) play a huge role under the code, but the code lacks explanation regarding the eligibility criteria of the IPs. It is a new profession that has been introduced under the code and it urges an appropriate authority and standards to control and manage the function of the IPs`[xii]

5. The code prescribes that the information utilities shall play a major role in a case under the Code. The Code however, also provides for creation of multiple information utilities. As such it becomes important that the database is centralised and information is spread across the utilities. In the absence of proper organisational structure, this would lead to scattered information and delay in obtaining the required information.

6. The manner in which the Code is currently being implemented seems to focus more on expeditiously operationalising the law rather than effectively implementing it. These concerns, if not addressed suitably, will defeat the purpose of enacting a new insolvency law to improve the recovery rate in order to promote the development of credit markets and entrepreneurship.

While the enforcement of the code has been a swift process and brings the insolvency framework of India at par with the international standards, its effective implementation depends on the efficacy of the institutional framework and the availability of qualified IPs within as short a span of time. Further, other existing debt recovery/enforcement laws are being amended in the light of the code to bring into effect an enabling infrastructure to deal with debt recovery and insolvency for it is important how these acts deal with the overlapping rights and interests created by them.

(Authored by Shreya Asopa, Associate)

[i] ICICI Bank Ltd. v. Innoventive Industries Limited, (NCLT, Mumbai Bench) C.P. No. 01/I&BP/NCLT/MAH/2016

[ii] Press Information Bureau, Government of India, Ministry of Finance on 4 November 2015 http://pib.nic.in/newsite/PrintRelease.aspx?relid=130200

[iii] Preamble of the Code

[iv] Press Information Bureau, Government of India, Background material for Economic Editor’s Conference (EEC)-2016 – Department of Economic Affairs (http://pib.nic.in/newsite/backgrounders.aspx?relid=153462)

[v] http://snehalkamdar.in/insolvency-bankruptcy-code-2016-key-highlights/

[vi] Section 12 of the Code

[vii] http://snehalkamdar.in/insolvency-bankruptcy-code-2016-key-highlights/

[viii] Smart Timings Steel Limited v. National Steel and Agro Industries Ltd. (NCLT, Mumbai Bench) C.P. No. 06/I&BP/MAH/2017

[ix] Section 53 of the Code

[x] Section 243 of the Code

[xi] Section 234 of the Code

[xii] http://www.prsindia.org/uploads/media/Bankruptcy/IBC%202016%20-%20Issues%20for%20consideration.pdf

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SEBI (Prohibition of Insider Trading) Regulations 2015

Introduction

On 15 January 2015, the Securities Exchange Board of India (“SEBI”) introduced a revamped Insider Trading Regulations after more than 2 decades of the first regulations brought in force on the issue. Initially, SEBI (Prohibition of Insider Trading) Regulations 1992 (“1992 Regulations”) was the only regulation that was brought into force by SEBI upon its establishment. Taking heed of the perceived lacunae and inadequacies of the 1992 Regulations, SEBI had set up a High Level Committee constituted under the Chairmanship of Justice (Shri) N.K. Sodhi in 2013 for its recommendations on the legal framework for prohibition of insider trading in India. The first draft of SEBI (Prohibition of Insider Trading) Regulations 2015 (the “Regulations”) was brought earlier in the year 2013. The SEBI (Prohibition of Insider Trading) Regulations, 2015 (“Regulations”) have, with certain exceptions, followed the recommendation of the Committee. The Regulations are to come into effect on the 120th day of their notification in the Official Gazette.[1]

Rationale behind the new regulations

Since the inception of the 1992 Regulations and even after substantial amendments in 2002, 2008 and 2011, SEBI has had limited success with regulating insider trading under the 1992 Regulations with the most prosecutions brought in by SEBI being dismissed or overruled by the appellate authority due to lack of evidence.[2] Therefore, for SEBI to be able to effectively attempt to regulate the menace of insider trading, it is necessary to bring clarity to the procedural and evidentiary aspects of the regulation which are difficult to accomplish in insider trading. For instance, while the 2002 amendments provided that insider trading comes into being if an insider trades while “in possession” of unpublished price sensitive information (UPSI), section 15G of the SEBI Act, which contains the penal provision, still carried the previous position which is that the trading must be “on the basis of” UPSI which imposed a higher standard on the regulator.[3]

It is to clear such discrepancies that the new Regulations are being enforced by SEBI. The new Regulations have introduced greater clarity in concepts and definitions along with a stronger legal and enforcement framework for prevention of insider trading.

Salient Features of the Regulations and Major Changes from the 1992 Regulations

The Regulations have been introduced to bring greater clarity to the concepts and tightening the norms and procedures under insider trading in India. The Regulations, along with its notes laying down the legislative intent for every section, seek to provide a clear understanding of the laws on insider trading and also establishes a stringent framework for prevention of the same.

Prohibition on insider trading and exemptions

The Regulations seek to prohibit the practice of insider trading in the markets. To that end, the Regulations provide the activities that would be considered as insider trading and the restrictions on the same under Chapter II of the Regulations. Therefore, any form of communication or procurement of unpublished price sensitive information (“UPSI”) by an insider and trading on such UPSI is prohibited.[4] It is to be noted that under the new Regulations even merely procuring the UPSI has been restricted even if no gain is subsequently made from the UPSI unlike the 1992 Regulations wherein the UPSI had to be communicated or dealt with to be deemed to be trading by an insider prohibited under law. However, UPSI may be communicated, provided, allowed access to or procured, in connection with a transaction which in the opinion of the board of the company would be in the best interests of the company.[5]

Trading by an insider when in possession of UPSI has also been restricted subject to certain exemptions such as when there is an off-market transfer between promoters who were in possession of the same price sensitive information or where the trading is pursuant to a trading plan.[6]

Definition of Insider and Connected Person

An ‘insider’ under the Regulations has been defined to include any person who is: i) a connected person; or ii) in possession of or having access to unpublished price sensitive information.[7] While the definition of ‘insider’ has not been varied greatly from that under the 1992 Regulations, it has expanded the scope of persons coming under the definition of ‘insider’ by greatly increasing the ambit of ‘connected person’.

Regulation 2(1)(d) of the Regulations gets a complete over hauling in comparison to the older definition of “Connected Person” as the newer definition tends to include anyone who is in contractual, fiduciary or employment relations with the promoters will be presumed to be ‘insiders’. Thus, the new rules include the immediate relatives of promotes, directors and employees who are in possession or have access to such information, within the scope of insiders by making such persons.

Further, the definition also bring into its ambit persons who may not seemingly occupy any position in a company but are in regular touch with the company and its officers and are involved in the know of the company’s operations. It is intended to bring within its ambit those who would have access to or could access unpublished price sensitive information about any company or class of companies by virtue of any connection that would put them in possession of unpublished price sensitive information.

UPSI

Under Regulation 2(1)(n), the definition of UPSI has been broadened. Earlier, UPSI could be information related to the company; however, under the Regulations any information related to securities would also come under the definition of UPSI.

Trading plans

The concept of ‘trading plans’ of insiders in line with Rule 10b5-1 has been introduced in the Regulations under Regulation 5. This is provision has been brought in to have transparent framework for trading in securities through the year by insiders in possession of UPSI. The insider would be required to submit trading plan in advance to the compliance officer for his approval. The compliance officer is also empowered to take additional undertakings from the insiders for approval of the trading plan. On approval, the trading plan shall also be disclosed to the stock exchanges, where the securities of the company are listed.

Disclosure

In addition to the already existing previous disclosure norms, the current disclosure norms under Regulation 6 and 7 of the new Regulations, makes it mandatory for the promoters, employees and directors of the company to notify the company of their holdings, and also material changes in the holdings from time to time. The company in turn has obligations to notify the stock exchange so as to make the disclosures public

Codes of Fair Disclosure & Conduct

Similar to the Model Code of Conduct in the 1992 Regulations, the new Regulations have provided for Codes of Fair Disclosure and Conduct.[8] The Code requires all listed companies to frame and publish a code of practices and procedures for fair disclosure of UPSI in accordance with the principles set out in Schedule A to the Regulations. Further, the board of directors of every listed company and market intermediary shall formulate a code of conduct to regulate, monitor and report trading by its employees and other connected persons in accordance with Schedule B to the Regulations.

Penalties

The Regulations do not provide for specific penalties for violations of the provisions. Under Regulation 13, the provisions on the penalties as provided under the SEBI Act, 1992 have been retained. Therefore, insider trading shall be punishable with a fine of Rs. 25,00,00,000 or 3 times the profit made from the trading, whichever is higher. SEBI also has the power to prohibit an insider from trading or dealing the securities, direct the return of securities traded in as well as declare the transaction as illegal and void. Any person found in violation of the provisions of the Regulation shall also be punishable with imprisonment extending to 10 years or a fine of Rs. 25,00,00,000 or both.

Insider Trading Regulations in Other Jurisdictions

USA

The United States of America has historically been the leading country in regulating and prohibiting insider trading and has enforced it more successfully and aggressively than any other jurisdiction, including the European Union. The Securities Exchange Act of 1934 (“SEC”) was the first legislation to officially tackle insider trading in America.

The definition set forth by the Securities Exchange Commission for what insider trading is and who can be convicted of insider trading leaves some room for interpretation and is the reason that much of insider trading law is derived from court decisions. Insider trading is defined as, “whenever it shall appear to the commission that any person has violated any provision of this title or the rules or regulations thereunder by purchasing or selling a security or security-based swap agreement… while in possession of material, non-public information…”. This implies that anyone who has access to non-public information and acts on it could be convicted for insider trading.

The penalties for insider trading are a maximum of 20 years in prison and a fine of $5 million. These fines were increased in the Sarbanes-Oxley Act of 2002. In addition, those convicted of insider trading can face civil penalty fines, which can be up to three times the profit gained or loss avoided as a result of an unlawful purchase.

In 2000, the SEC enacted Rule 10b5-1, which defined trading “on the basis of” inside information as any time a person trades while aware of material non-public information — so that it is no defence for one to say that he would have made the trade anyway. This rule also created an affirmative defence for pre-planned trades.

UK

In the United Kingdom, the Financial Services Authority (FSA) regulates securities trading under the Financial Services and Markets Act, 2000 (“FSMA”) and the Criminal Justice Act, 1993 (“CJA”) with. As CJA deals with only individuals, corporations and other entities are excluded from being held criminally liable. Further, as criminal convictions are have a higher standard of proof and are consequently, difficult to obtain, the FSMA introduced the wider civil offense of market abuse, which covered “insider dealing”, “disclosing inside information,” and “dissemination of false or misleading information.”

In the United Kingdom an insider is any person who has inside information. An insider may be a part of management, an employee, a shareholder. Insider trading may occur as a result of criminal activities or a friend tipping them off. Inside information is defined as, “information that is not generally available and that a reasonable investor would use to help them make investment decisions. It is also information that, if generally available, would be likely to significantly affect the price of an investment”. Thus, UK follows the ‘possession theory’ in which any person given confidential information violates the law by then proceeding to trade on that information.

The punishment for insider trading or any kind of market abuse is a maximum of seven years imprisonment or an unlimited fine. On top of these penalties, a wider range of civil penalties could be imposed.

EU

The core concept of the Market Abuse Directive of 2003 of the European Council is the definition of “inside information”. This is information of a precise nature that has not been made public relating, directly or indirectly, to one or more issuers or one or more securities. The characterization of inside information as precise is necessary to exclude opinions or rumours from the definition. The Directive contains broad provisions (in Articles 2 and 3) that prohibit persons in possession of inside information from: (a) dealing in the securities to which the information relates using inside information; (b) disclosing inside information to third parties unless the disclosure is made in the normal course of employment, profession or duties; (c) recommending or inducing other persons, on the basis of inside information, to trade.

Also, one of the most important provisions of the EC Directive is that it requires members to cooperate with each other “whenever necessary for the purpose of carrying out their duties” in connection with the EC Directive. The significant benefit of this provision is that it requires no further agreements between or among states regarding cooperation.

Analysis and Conclusion

SEBI has brought about the much-needed amendments in an effort to regulate the illicit transactions in shares of listed firms by management personnel and ‘connected persons’. It has broadened the concept of insiders and unpublished price sensitive information thereby making the prevention of the practice of insider trading more stringent. The Regulations have also struck a balance between the restriction of and the requirement to disclose insider information for legitimate purposes such as for mergers and due diligence of the affairs of companies. Further, the legislative notes accompanying the provisions shall be a useful and effective tool for the interpretation and implementation of the provisions in future.

The laws prohibiting insider regulation in India are much more restrictive in nature than many other countries, including the USA. Under the laws of India, anyone in connection with the company that is expected to put him in possession of unpublished price sensitive information regardless of how that person has come into possession may be liable to be termed as an insider while the US regulations have a prerequisite that there be any fiduciary relationship or a duty of trust or confidence between the source of the information and the recipient of the information for liability to attach.

However in the past, in spite of the existence of such regulations, the laws are hardly ever executed in practice. In most cases, the SEBI rulings are overruled by the Securities Appellate Tribunal citing insufficient evidence. Further, due to its compounding offense and consent process which allows violators of insider trading to pay fines and fees instead of going through the criminal proceeding and potentially serving prison time, SEBI has not been able to make a criminal conviction to date.

The SEBI Act gives the regulatory body wide powers to investigate matters of concerns relating to the stock markets in the country. Therefore, while the new Regulations are a welcome change for monitoring the insider trading activity more effectively, a transformation in the manner of enforcement of the laws is required more than ever.

( Authored by Mohar Majumdar, Associate)

[1] Reg. 1(2) of the Regulations

[2] See Hindustan Lever Ltd. v. SEBI(1998) 18 S.C.L. 311AA

[3] http://indiacorplaw.blogspot.in/2013/03/review-of-insider-trading-regulations.html

[4] Reg. 3 of the Regulations

[5] Reg. 3(3) of the Regulations

[6] Reg. 4(1) of the Regulations

[7] Reg. 2(1(g) of the Regulations

[8] Chapter IV of the Regulations