Taxmann's Securities Laws & Capital Markets (SLCM) | CRACKER

Chapter-wise Marks Distribution

Previous Exam Trend Analysis

Chapter-wise Comparison with Study Material

11

CHAPTER

1.Explain the disclosure requirements by certain persons under the SEBI (Prohibition of Insider Trading) Regulations, 2015.[June 2009 (4 Marks)]

Ans.: Disclosures by certain persons [Regulation 7] :

Initial Disclosures :

Continual Disclosures :

` 10 lakhs

Disclosures by other connected persons:

2.Distinguish between: ‘Insider’ and ‘connected persons’ as per the SEBI (Prohibition of Insider Trading) Regulations, 2015.[Dec. 2010 (5 Marks)]

Ans.: Insider [Regulation 2(g)]:

Connected Person [Regulation 2(d)] :

ii deemed to be connected persons

j

3. Write a short note on: Chinese Wall Policy [June 2011 (4 Marks)]

Ans.:

4. What is meant by “unpublished price sensitive information”? What are the restrictions on communication or procurement of unpublished price sensitive information? [Dec. 2011 (4 Marks)]

Ans.: -

Communication or procurement of unpublished price sensitive information [Regulation 3] :

Explanation:-

5. What do you mean by insider trading? Enumerate the penalties which can be imposed under the SEBI Act, 1992 for insider trading?

[June 2013 (4 Marks)]

Ans.: Please refer to answer of Question No. 8.

6. Insider trading normally means trading in shares of a company by the persons who are in the management of the company or close to them on the basis of unpublished price sensitive information which they possess but others not. In the light of this, state whether the following information is price sensitive:

(i) The CEO of a company met with an accident and had been hospitalized.

(ii) Intended declaration of rights issue in near future.

(iii) RBI has increased repo rate by 25 basis points.

(iv) The company is going to have another plant at Rudrapur, Uttarakhand.

(v) The Chairman of the company has submitted his resignation to the Board under protest for selling a particular brand to another company.

[Dec. 2013 (4 Marks)]

Ans.: -

11.6

7. Write a short note on: Unpublished price sensitive information

[June 2014 (4 Marks)]

Ans.: -

8. Raghav, General Manager (Accounts) of X Ltd., was found to be indulging in insider trading and as a consequence, the company terminated his services. The SEBI also took cognizance of the matter and initiated proceedings against him under the SEBI (Prohibition of Insider Trading) Regulations, 2015. Raghav pleaded that since X Ltd. had already penalised him by terminating his services, the SEBI could not initiate any proceedings against him. As per the SEBI Regulations and decided case laws, suggest whether the SEBI has a right to take any action against Raghav in this case of insider trading.

[June 2014 (8 Marks)]

Ans.: -

` 25 Crores 3 times of profits

` 10 lakhs

9. A company shall specify a trading period for trading in its own securities. Comment. [Dec. 2014 (4 Marks)]

Ans.: Trading when in possession of unpublished price sensitive information [Regulation 4] :

Trading Plans [Regulation 5] :

i ii

logic is that 20th day earlier to close of financial period the company has announce financial results)

iv

In other words, second trading plan cannot be made unless first trading plan ends v

10. Sunil, Company Secretary and Executive Director of a company, had bought shares of that company on behalf of his family members on the basis of unpublished price sensitive information, which was not known to general public but to him as an employee of the company.

Family members later on tendered the said shares in an open offer announced by some acquiring company at a higher price, thereby making huge gains. The SEBI found Sunil guilty of misconduct of insider trading and imposed penalty. Sunil admitted that he had made a mistake but contested the penalty. He, however, was willing to pay back the profit earned by sale of shares.

Considering the facts of the case, you are required to suggest whether as per the relevant legal provisions relating to insider trading, the SEBI should waive the penalty considering the fact that Sunil admits indulging in insider trading and is willing to pay back the whole profit earned. [Dec. 2014 (8 Marks)]

Ans.:

` 25 Crores 3 times of profits

` 10 lakhs

Fund

sine qua non

11. Unpublished price sensitive information is any information which relates directly or indirectly to a company.

Ans.: Please refer to answer of Question No. 7.

12. Write a short note on: Insider Trading

[June 2015 (4 Marks)]

[June 2015 (4 Marks)]

Ans.: -

SEBI v. Sriram Mutual

Penalty for insider trading [Section 15G]: ` 10 lakhs ` 25 Crore 3 times of profits

13. The SEBI Act, 1992 provides for prohibition of manipulative and deceptive devices and insider trading. [Dec. 2015 (5 Marks)]

Ans.: -

14. ‘Insider’ means any person who is or was connected with the company or is deemed to have been connected with the company. Comment. [June 2016 (4 Marks)]

Ans.: Please refer to answer of Question No. 2.

15. What is ‘price sensitive information’? Which information is deemed to be price sensitive information? State with reasons whether the following information is price sensitive:

(i) The CEO of a company died in an air-crash.

(ii) RBI has increased its statutory liquidity ratio (SLR) by 25 basis points.

(iii) The company is setting-up another plant in Gujarat.

(iv) The company is negotiating with a foreign company to sell its stake in Star Ltd. [June 2016 (8 Marks)]

Ans.: -

Hindustan Levers Ltd. v. SEBI Rakesh Agarwal v. SEBI

Information Price sensitive or not

Reason- -

16. Write note on: Person deemed to be connected person [Dec. 2016 (4 Marks)]

Ans.: Please refer to answer of Question No. 2.

17. Write a short note on: Provisions of the Companies Act, 2013 relating to insider trading [June 2017 (4 Marks)]

Ans.: Section 195 of the Companies Act, 2013 has been deleted by the Companies Amendment Act, 2017. Thus, this question is not relevant for Dec. 2017 and onward exams.

18. Trading plan is an exception to the general rule that an insider should not trade when in possession of unpublished price sensitive information. However, trading plan once made cannot be revoked. Do you agree? If yes, give reasons for the same. [Dec. 2017 (6 Marks)]

Ans.: Please refer to answer of Question No. 9

19. What is Trading Plan under the SEBI (Prohibition of Insider Trading) Regulations, 2015? State the requirements to be complied with in this regard. [Dec. 9 2018 (4 Marks)]

Ans.: Please refer to answer of Question No. 9

20. You are working as the Company Secretary of a listed company viz. Mindspare Ltd. The company is in advance stage of negotiation with a buyer, who will drastically improve the profitability and financial position of the company. You have got some information that one of the employees of the company, who is involved in the negotiation may indulge in trading of shares of the company. Being a compliance officer, you are required to formulate a code of conduct to regulate, monitor and report trading by employees and other connected persons towards achieving compliance with the SEBI (Prohibition of Insider Trading) Regulations, 2015. [Dec. 2018 (7 Marks)]

Ans.:

Code of Conduct of Mindspare Ltd.

[As per Schedule B read with Regulation 9(2)(1) of the SEBI (Prohibition of Insider Trading) Regulations, 2015]

1. Applicability:

2. Objective of the code:

3 Compliance Officer:

4. Prohibition on forward dealings in securities by director or KMP:

5. Trading in securities:

7. Pre-clearance of trades:

11.

Annexure

Various Forms will appear here

8. Trading Plans:

9. Disclosure Requirements:

10. Uploading of the Code on Company’s Website

Compliance with the Code of Practices and Procedures for Fair Disclosure of Unpublished Price Sensitive Information

21. The price of equity share of a listed company viz. Next Dial Ltd. (NDL) increased from ` 10 to high of ` 50 i.e. a rise of 500% during the period 1st April, 2018 to 30th Sept., 2018. NDL had entered into a Share Purchase Agreement (SPA) with the proposed acquirer(s) to acquire 40% of the subscribed equity share capital as of 31st Aug., 2018 which would result in change of management. This initial discussion on the deal was made on 1st April, 2018 but SPA was signed on 25th April, 2018.

During 1st April, 2018 to 30th Sept., 2018, the promoter and his wife dealt in the script of Next Dial Ltd. Referring to the provisions of SEBI (PIT) Regulations, answer the following:

(

i) Define Unpublished Price Sensitive Information.

(ii) Whether there was any Unpublished Price Sensitive Information (UPSI)?

(iii) What will be the date of UPSI?

(iv) What are the factors to be taken into account by the adjudicating officer while imposing penalty for the act? [June 2019 (8 Marks)]

Ans.: Regulation 2(n) SEBI (Prohibition of Insider Trading) Regulations, 2015 -

11.16

22. Who can be a Compliance Officer under SEBI (PIT) Regulations, 2015? Will an Engineering graduate from a top engineering college with 5 years of experience working as Chief Technical Officer (CTO) be a Compliance Office? Discuss. [Dec. 2019 (5 Marks)]

Ans.: c-

Explanation:

Thus, Engineering graduate from a top engineering college with 5 years of experience working as Chief Technical Officer (CTO) cannot be appointed as a Compliance Officer in terms of the SEBI (Prohibition of Insider Trading) Regulations, 2015 as he is not financially literate.

23. As a Company Secretary in employment of Delux Ltd., a listed company, what will be your role in monitoring trading window under SEBI (Prohibition of Insider Trading) Regulations, 2015. [Dec. 2020 (4 Marks)]

Ans.:

[June 2021 (4 Marks)]

24. ‘‘Trading plan is an exception to the general rule that an insider should not trade when in possession of unpublished price sensitive information’’. In the light of this statement, explain the concept of trading plan and its essential elements.

Ans.: Please refer to Regulation 5 in answer of question No. 9.

25. Referring to the SEBI Insider Trading Regulations, answer the following:

(a) What is ‘unpublished price sensitive information’?

(b) State with reasons whether the following information is price sensitive:

(i) RBI has increased its Statutory Liquidity Ratio (SLR) by 15 basis points.

(ii) The company is increasing its authorized share capital.

[June 2021 (4 Marks)]

Ans.: -

26. The term internal control is generally linked to controls mechanism for financial and non-financial processes of an entity. Is there any internal control process to prevent insider trading under SEBI Regulations? You, being a Company Secretary of the company, suggest your CEO about internal controls to ensure the compliance under the said regulation? [Dec. 2021 (4 Marks)]

Ans.:

27. Answer the following with reference to SEBI Insider Trading Regulations by giving reasons:

(i) Does exercise of ESOPs/ESPS come under the definition of Trading under the Insider Trading Regulations?

(ii) Can a CFO, who has not reported to the Board of Directors, act as a Compliance Officer and update the Board on the transactions related to Insider Trading?

(iii) Can the company appoint more than one person as Compliance Officer under the regulation? [June 2022 (5 Marks)]

Ans.:

28. Ankur traded in shares of Sitez Ltd., a listed company. The trading plan was approved by compliance officer on May 19, 2022. Ankur comes to know on July 20, 2022 that this transaction involve unpublished price sensitive information.

(i) What will be the impact on the transactions of Ankur?

(ii) What conditions are attached to the trading plan? [Dec. 2022 (5 Marks)]

Ans.:

Conditions attached to trading plan:

(Logic is that 20th day earlier to close of financial period the company has to announce financial results)

(In other words, second trading plan cannot be started unless first trading plan ends)

Securities Laws & Capital Markets (SLCM) | CRACKER

AUTHOR : N.S. ZAD

PUBLISHER : TAXMANN

DATE OF PUBLICATION : JUNE 2023

EDITION : 9TH EDITION

ISBN NO : 9789357780988

NO. OF PAGES : 448

BINDING TYPE : PAPERBACK

Description

This book is prepared exclusively for the Executive Level of Company Secretary Examination requirement. It covers the questions (topic-wise) & detailed answers strictly as per the syllabus of ICSI.

The Present Publication is the 9th Edition for CS-Executive | Old Syllabus

| Dec. 2023 Exam. This book is authored by CS N.S. Zad, with the following noteworthy features:

u Coverage of the book includes

 Fully-Solved Questions of Past Exams

u Solved Paper: June 2023 (Suggested Answers)

u [Topic-wise] arrangement of past exam questions & answers

u [Most Amended & Updated] Covers the latest applicable provisions and amendments under the Companies Act, 2013 & SEBI Regulations

u [Marks Distribution] Chapter-wise marks distribution from June 2015 onwards

u [Previous Exam Trend Analysis] from June 2021 onwards

u [ICSI Study Material] Chapter-wise comparison for past exams

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