Business   

Insiders may have to return ‘short swing profits’: SEBI draft

MUMBAI: With a view to strengthening corporate governance norms, the Securities and Exchange Board of India on Tuesday proposed to make it mandatory for insiders to surrender profits made from shares if sold within six months of purchase.

Under the ‘Short Swing Profit’ regulations proposed by the market regulator, insiders would be required to surrender the profits made from transactions in equity in case, “both the buy and sell side of the transactions are entered into within six months of the other.”

The draft regulations, on which the regulator has invited comments from the public till January 21, states that insider transactions would include trading in equity of a company, its parent and subsidiaries. Such profit would have to be returned to the company, according to the draft norms. The insiders would include all key management personnel, directors, direct or indirect beneficial owners having at least 10 per cent shares, alone or in concert, of the company.

The regulations stipulate that “surrender of profits made in such short swing transactions shall be automatically imposed as part of good corporate governance requirement.” The regulator said insiders are assumed to have a long term investment in the company. These people are not expected to make rapid buy or sell transactions, which are presumably based on at least some level of superior access to information, whether material or not, it said. Under the draft regulations, these provisions will not apply in the case of transactions approved by a regulatory authority, employee benefit plans, bonafide gifts, inheritances, and mergers and acquisitions. The regulator further said that “certain securities may also be considered as exempt altogether” from the purview of short-swing regulations. — PTI

Printer friendly page  
Send this article to Friends by E-Mail

Stories in this Section

FM non-committal on moderation in tax rates
Rising rupee pulls down export growth
New year starts on cautious note
I-T code will be released with discussion paper
Insiders may have to return ‘short swing profits’: SEBI draft
GAIL, RCF sign MoU
IT: domestic growth will balance global slowdown
Three States apply for petrochemical region
Wockhardt launches cetirizine in U.S.
Rupee ends steady
Exchange Rates
Bullion Rates
Import duty on wheat flour scrapped
Commission term extended
TRAI on broadband speed

Copyright © 2008, The Hindu. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu