valid as on 31/01/2023

5D. (1) No insider shall trade in the units of a scheme of a mutual fund, when in possession of unpublished price sensitive information, which may have a material impact on the net asset value of a scheme or may have a material impact on the interest of the unit holders of the scheme:
Explanation –The dealings of a person in the units of a mutual fund when in possession of
unpublished price sensitive information, shall be presumed to have been motivated by the knowledge and awareness of such information in his possession:

Provided that the insider may prove his innocence by demonstrating the circumstances including the following: –

(i) the transaction is an off-market inter-se transfer between insiders who were in possession of the same unpublished price sensitive information and both parties had made a conscious and informed trade decision:
Provided that such off-market trades shall be reported by the insiders to the asset
management company within two working days. Every asset management company shall notify the particulars of such trades to the stock exchange or in any other manner as may be specified by the Board within two trading days from receipt of the disclosure or from becoming aware of such information;

(ii) such transaction in question was carried out pursuant to a statutory or regulatory obligation including subscription or investment in mutual fund units pursuant to the mandatory requirement specified by the Board for “Alignment of interest of Designated Employees of asset management companies with the Unit holders of the mutual fund schemes”;

(iii) such transaction in question is triggered by systematic transactions, where such systematic transactions are registered at least two months prior to such transaction;

(iv) such transaction in question is triggered by irrevocable trading plans, where such plan has been approved by the Compliance Officer and disclosed on the Stock Exchange platform or in any other manner as may be specified by the Board, at least sixty days before the commencement of trades:

Provided that the trading period for each plan shall be at least six months with no overlapping of different trading plans:

Provided further that for the trading as per the approved plan, no requirements/ norms related to pre-clearance of trading or closure period or contra trade shall be applicable.

(2) In the case of connected persons, the onus of establishing that they were not in possession of unpublished price sensitive information, shall be on such connected persons and in other cases, the onus would be on the Board.

Inserted vide the Securities and Exchange Board of India (Prohibition of Insider Trading) (Amendment) Regulations, 2022 dated 24.11.2022. To view the Notification. Click Here.

SEBI Notification dated 24.11.2022 regarding SEBI (Prohibition of Insider Trading) (Amendment) Regulations, 2022.


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