policy-on-prohibition-of-insider-trading

Policy On Prohibition Of Insider Trading

policy on prohibition of insider trading

Introduction:

  1. The Securities and Exchange Board of India (“SEBI”) notified the SEBI (Prohibition of Insider Trading) Regulations, 2015 (“PIT Regulations / Regulations”) on January 15, 2015, which seek to govern the conduct of insiders, connected persons and persons who are deemed to be connected persons on matters relating to Insider Trading.
  2. Pursuant to Regulation 4(2)(c)(iv) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015(“LODR Regulations”), Khadim India Limited (the “Company”) is required to formulate a framework to avoid insider trading and abusive self-dealing (“Insider Trading Policy”).
  3. This Code of Conduct to Regulate, Monitor and Report Trading by Designated Persons (“Code”) has been prepared pursuant to Regulation 9(1) of the PIT Regulations, 2015 by adopting the standards set out in Schedule B of the Regulations in order to regulate, monitor and report trading by Designated Persons and their immediate relatives towards achieving compliance with the Regulations.
  4. This code has been adopted by the Board of Directors (the “Board”) at its meeting held on September 15, 2017 and became effective from the date of listing of Equity Share of the Company with the Stock Exchanges. The Code of Conduct incorporates the amendments as approved by the Board of Directors on March 26, 2019 so as to align it with the new regulation i.e. the Securities and Exchange Board of India (Prohibition of Insider Trading) (Amendment) Regulations, 2018(“PIT Amendment Regulations”).

Objective:

This Insider Trading Policy is enforced to maintain the highest ethical standards of dealing in securities of the Company by persons to whom it is applicable. The provisions of the Insider Trading Policy are designed to regulate, monitor and report trading by Insiders in the securities of the Company.

Definitions

In this Code, unless the context otherwise provides:

      1. "Act" means the Securities and Exchange Board of India Act, 1992, as amended from time to time and as applicable for the time being in force.
      2. Company” means KHADIM INDIA LIMITED.
      3. Compliance Officer” means the Company Secretary who has been appointed as the Compliance Officer for the purposes of the Regulations and shall work subject to guidance of the Managing Director and/ or the Chairman and the Board of Directors.
      4. Connected Persons” means Connected Person as defined under section 2(d) of the PIT Regulations.
      5. Connected Persons” means:
        • Members of the Board of Directors of the Company;
        • Chief Executive Officer (CEO), Chief Financial Officer (CFO) and Company Secretary (CS);
        • Auditors of the Company;
        • All employees of the Accounts, Finance, Legal and Secretarial Department who have access to unpublished price sensitive information of the Company ;
        • Head of Internal Audit Department;
        • Secretaries/Executive Assistants reporting to the Chairman or the Managing Director/Whole Time Director/CEO/CFO/CS;
        • All Departmental Heads of the Company (Business Unit, Manufacturing Unit and Corporate Human Resources);
        • Employees of other Departments/Divisions on a case-to-case basis, who could be reasonably expected to have access to unpublished price sensitive information(s) relating to the Company, to be decided by the Chairman/Managing Director/Whole-Time Director/ Compliance Officer/Chief Financial Officer, on a case-to-case basis;
        • All promoters of the Company;
        • Employees upto two levels below of Chief Executive Officer of the Company irrespective of their functional role in the company or ability to have access to unpublished price sensitive information;
        • Any support staff of the Company, such as IT staff or secretarial staff Legal Staff, Finance Staff, Strategy Staff who have access to unpublished price sensitive information; and
        • Such other persons as may be identified by the Compliance Officer.
        • "Generally available information" means information that is accessible to the public on a non- discriminatory basis.

        • "Immediate relative" means a spouse of a person, and includes parent, sibling, and child of such person or of the spouse, any of whom is either dependent financially on such person, or consults such person in taking decisions relating to trading in securities.

        • "Note:" If spouse is financially independent and doesn’t consult an insider while taking trading decisions, the spouse won’t be exempted from the definition of immediate relative. A spouse is presumed to be an “immediate relative”, unless rebutted so.

      6. “Insider” means any person who is:
        • a designated person(s) & their immediate relatives
        • a connected person; or
        • in possession of or having access to unpublished price sensitive information.
      7. Prohibited Period” means the period effective from the date on which the Company sends intimation to the Stock Exchange advising the date of the Board Meeting, up to 24 hours after the price sensitive information is submitted to the Stock Exchange.
      8. Unpublished Price Sensitive Information” means any information, relating to a company or its securities, directly or indirectly, that is not generally available which upon becoming generally available, is likely to materially affect the price of the securities and shall, ordinarily including but not restricted to, information relating to the following: –
        • financial results;

        • dividends;

        • change in capital structure;

        • mergers, de-mergers, acquisitions, delistings, disposals and expansion of business and such other transactions;

        • changes in key managerial personnel; and

        • material events in accordance with the listing agreement.

      9. "Promoter" shall have the meaning assigned to it under the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018 or any modification thereof.
      10. "Promoter Group" shall have the meaning assigned to it under the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018 or any modification thereof.
      11. "Prohibited Period" means the period effective from the date on which the Company sends intimation to the Stock Exchange advising the date of the Board Meeting, up to 48 hours after the price sensitive information is submitted to the Stock Exchange.
      12. "Securities" shall have the meaning assigned to it under the Securities Contracts (Regulation) Act, 1956 or any modification thereof.
      13. "Trading" shall have the meaning assigned to it under the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015 or any modification thereof.
      14. "Trading Window" means a period to be specified by the Company in which trading of securities can be done by the Directors, Key Managerial Personnel and Designated Employees either directly or through their Dependants or Relatives.
      15. "Unpublished Price Sensitive Information" shall have the meaning assigned to it under the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015 or any modification thereof.

Duties of Compliance Officer

      1. The Compliance Officer shall report on insider trading to the Board of Directors of the Company and in particular, shall provide reports to the Chairman of the Audit Committee, if any, or to the Chairman of the Board of Directors at such frequency as may be stipulated by the Board of Directors but not less than once in a year.
      2. The Compliance Officer shall assist all employees in addressing any clarifications regarding the Securities & Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015 and the Company’s Code of Conduct.
      3. Such other acts, deeds and things as may be required under PIT Regulations.

RESTRICTIONS ON COMMUNICATION AND TRADING BY INSIDERS

No Insider shall communicate, provide or allow access to any Unpublished Price Sensitive Information in respect of the Equity Shares of the Company to any person including other Insiders, except where such communication is in furtherance of legitimate purposes and performance of duties of legal obligations. Pursuant to Regulation 3(2A) of PIT Regulations the Board of Directors of the Company has adopted a “Policy for determination of Legitimate Purposes” which forms part of the “Codes of Fair Disclosure and Conduct” formulated under Regulation 8.
An Unpublished Price Sensitive Information (“UPSI”) may be communicated, provided, allowed access to or procured, in connection with a transaction that would:

  • entail an obligation to make an open offer under the Takeover Regulations where the Board of Directors of the Company is of informed opinion that sharing of such information on the proposed transaction is in the best interests of the Company;
  • not attract the obligation to make an open offer under the Takeover Regulations but where the Board of Directors of the Company is of informed opinion that sharing of such informationis in the best interests of the Company and the information that constitute UPSI is disseminated to be made generally available at least two trading days prior to the proposed transaction being effected in such form as the Board of Directors may determine to be adequate and fair to cover all relevant and material facts.

INFORMATION ON A NEED TO KNOW BASIS & CHINESE WALL PROCEDURES

All information shall be handled within the organisation on a need-to-know basis and no UPSI shall be communicated to any person except in furtherance of the insider’s legitimate purposes, performance of duties or discharge of his/her legal obligations.
Norms for appropriate Chinese Walls procedures & processes will be as under –

      1. To prevent the misuse of confidential information, the Company shall separate those areas of the Company which routinely have access to confidential information, considered “inside areas” from those areas which deal with sale/marketing/investment advise or other departments providing support services, considered “public areas”.
      2. The employees in the inside area shall not communicate any price sensitive information to any one in public area.
      3. The employees in inside area may be physically segregated from employees in public area.
      4. Demarcation of the various departments as inside area may be implemented by the Company.
      5. In exceptional circumstances employees from the public areas may be brought “over the wall” and given UPSI on the basis of “need to know” criteria, under intimation to the Compliance Officer.

TRADING WINDOW

      • Designated persons may execute trades subject to compliance with these regulations. Towards this end, a notional trading window shall be used as an instrument of monitoring trading by the designated persons. The trading window shall be closed when the compliance officer determines that a designated person or class of designated persons can reasonably be expected to have possession of unpublished price sensitive information. Such closure shall be imposed in relation to such securities to which such unpublished price sensitive information relates. Designated persons and their immediate relatives shall not trade in securities when the trading window is closed.
      • Trading restriction period can be made applicable from the end of every quarter till 48 hours after the declaration of financial results.
      • The gap between clearance of accounts by audit committee and board meeting should be as narrow as possible and preferably on the same day to avoid leakage of material information.
      • When the trading window is open, trading by designated persons shall be subject to preclearance by the compliance officer, if the value of the proposed trades is above such thresholds as stipulated by the board of directors.

      The Compliance Officer shall maintain a register containing the details of the period of closure of Trading Window in the format prescribed in Annexure-1.

Pre-clearance of trades

All Designated Persons who intend to trade in the securities of the Company (either in their own name or in any immediate relative’s name) i.e. buy or sell securities and if the value of the securities likely to be traded, whether in one transaction or a series of transactions over any calendar quarter, aggregates to a traded value in excess of Rs.10,00,000/- (Rupees Ten Lakh Only), should pre-clear the transactions by making an application in the prescribed format.

Pre-clearance dealing Procedure:

      1. An application for pre-clearance of trade may be made in “Annexure-2” to the Compliance Officer along with an undertaking in “Annexure-3” in favour of the Company by such Designated Employee, Director, Officer incorporating, inter alia, the following clauses, as may be applicable:
        • That the Designated employee/ director/officer does not have any access or has not received Price Sensitive Information up to the time of signing the undertaking.
        • That in case the Designated Employee, Director, Officer has access to or receives Price Sensitive Information after the signing of the undertaking but before the execution of the transaction he or she shall inform the Compliance Officer of the change in his position and that he or she would completely refrain from dealing in the securities of the company till the time such information becomes public in the securities of the Company till the time such information becomes public.
        • That he or she has not contravened the code of conduct for prevention of insider trading as notified by the Company from time to time.
        • That he or she has made a full and true disclosure in the matter.
      2. The Compliance Officer shall on receiving an application provide the Director, Officer, and Designated Employee with an acknowledgement on the duplicate of the application.
      3. The Compliance Officer shall grant approval in “Annexure 4” within 2 days from the date of acknowledgement.
      4. The Compliance Officer shall retain copies of all applications and acknowledgements. The Compliance Officer shall maintain record of Pre-Clearance of Trade in securities in "Annexure-5"
      5. In exceptional circumstances consent may not be given if the Compliance officer is of the opinion that the proposed deal is on the basis of possession of any Unpublished Price Sensitive information. There shall be no obligation to give reasons for any withholding of consent.
      6. If so requested by the Compliance Officer, Director, Officer, Designated Employee must ensure that his stockbroker is authorised to disclose to the Company all matters relevant to his share dealings.

Other Restrictions:

      1. All Directors, Officers, Designated Employees has to inform the Company in “Annexure 6” about his/her transaction after receiving the preclearance approval within two days of execution of transaction. In case the DP doesn’t trade he/she has to submit a NIL report stating reasons as to why no transaction was executed.
      2. All Directors, Officers, Designated Employees shall execute their order in respect of securities of the Company within one week after the approval of pre-clearance is given. If the order is not executed within one week after the approval is given, the Directors, Officers, and Designated Employees must pre clear the transaction again. All Directors, Officers, Designated Employees shall hold their investments in securities for a minimum period of 30 days irrespective of mode of acquisition in order to be considered as being held for investment purposes.
      3. The Compliance Officer may be empowered to grant relaxation from strict application of such restriction for reasons to be recorded in writing provided that such relaxation does not violate these regulations.

TRADING PLANS

      1. An Insider shall be entitled to formulate a ‘Trading Plan’ and present it to the Compliance Officer for approval and public disclosure pursuant to which trades may be carried out on his behalf in accordance with such plan.

Such Trading Plan shall:

      1. not entail commencement of trading earlier than six months from the public disclosure of the plan;
      2. not entail trading for the period between the twentieth trading day prior to the last day of any financial period for which results are required to be announced by the issuer of the securities and the second trading day after the disclosure of such financial results;
      3. entail trading for a period of not less than twelve months;
      4. not entail overlap of any period for which another trading plan is already in existence;
      5. set out either the value of trades to be effected or the number of securities to be traded along with the nature of the trade and the intervals at, or dates on which such trades shall be effected; and
      6. The Compliance Officer will review the Trading Plan to assess whether the Plan would have any potential for violation of the PIT Regulations. The Compliance Officer will be entitled to seek such express undertakings as may be necessary to enable such assessment and to approve and monitor the implementation of the plan.
      7. Provided further that trading window norms and restrictions on contra trade shall not be applicable for trades carried out in accordance with an approved trading plan. The Trading Plan once approved shall be irrevocable and the insider shall mandatorily have to implement the plan, without being entitled to either deviate from it or to execute any trade in the securities outside the scope of the trading plan.
      8. Implementation of the Trading Plan shall not be commenced if any unpublished price sensitive information in possession of the designated person / insider at the time of formulation of the plan has not become generally available at the time of the commencement of implementation and in such event the compliance officer shall confirm that the commencement ought to be deferred until such Unpublished Price Sensitive Information becomes generally available information so as to avoid a violation of the code.
      9. Upon approval of the trading plan, the Compliance Officer shall notify the plan to the stock exchanges on which the securities are listed.
      10. Designated person (including their immediate relatives) who is permitted to trade shall not execute a contra trade i.e., enter into an opposite transaction during the next 6 (six) months following the prior transaction (“contra trade”). However, the restriction on contra trade shall not apply to:
      11. Exercise of the options under the Company’s ESOPs;
      12. Sale of shares acquired under the Company’s ESOPs, provided that designated person is not in possession of UPSI at the time of sale.

PROCESS FOR HOW AND WHEN PEOPLE ARE BROUGHT ‘INSIDE’ ON SENSITIVE TRANSACTIONS.

      1. The CIO in consultation with MD or CFO of the Company shall decide on how and when any person(s) should be brought ‘inside’ on any proposed or ongoing sensitive transaction(s).
      2. A person(s) shall be brought inside on any proposed or ongoing sensitive transaction(s) of the Company who may be an existing or proposed partners, collaborators, lenders, customers, suppliers, merchant bankers, legal advisors, auditors, insolvency professionals or other advisors or consultants etc. for legitimate purpose which shall include the following;
      3. In the ordinary course of business.
      4. In furtherance of performance of duty(ies);
      5. For discharge of legal obligation(s).
      6. For any other genuine or reasonable purpose as may be determined by the CIO of the Company.
      7. For any other purpose as may be prescribed under the Securities Regulations or Company Law or any other law for the time being in force, in this behalf, as may be amended from time to time.

REPORTING AND DISCLOSURE REQUIREMENTS

      1. Initial Disclosures of holdings
        Every person on appointment as a Key Managerial Personnel or a Director of the Company or upon becoming a Promoter or member of the promoter group shall disclose his holding in securities of the Company within 7 (seven) days of such appointment or becoming a Promoter/member of the Promoter Group / Key Managerial Personnel / Director inform the Company in the prescribed format (in Form B, as prescribed or amended by SEBI, from time to time).
      2. Continual Disclosure
        Every Promoter member of the promoter group, Designated person (including their immediate relatives) and Director of the Company shall disclose to the Company the number of Equity Shares acquired or disposed of within two trading days of such transaction if the value of the Equity Shares traded, whether in one transaction or a series of transactions over any calendar quarter, aggregates to a traded value in excess of Rs.10,00,000/- (Rupees Ten Lakhs only) the prescribed format (in Form C, as prescribed or amended by SEBI, from time to time).
      3. The disclosure shall be made within two trading days of:
      4. the receipt of intimation of allotment of shares, or
        the acquisition or sale of shares or voting rights, as the case may be.

      5. Disclosures by other connected persons
        The Company at its discretion may require any other connected person or class of connected persons to make disclosures of his holding and trading in Equity Shares of the Company in the prescribed format (in Form D, as prescribed or amended by SEBI, from time to time) and at such frequency as determined by the Company.

      6. COMPLIANCES BY DESIGNATED PERSONS
      7. Designated Persons shall be required to disclose the following:
      8. One Time
        The Designated person shall be required to disclose the following information to the Company (in a format as prescribed by the CIO in Annexure-7), one time basis
        his/her Permanent Account Number or any other identifier authorized by law
        name of graduation / post-graduation educational institution
        name of past employers

Annual Disclosure and Continual Disclosure

      1. The Designated person shall disclose the following information to the Company (in a format as prescribed in Annexure-7), on annual basis, and on continual basis, as and when the information changes within 30 days of such change;
        1. Name of Immediate Relatives
        2. persons with whom such designated person(s) shares a Material Financial Relationship
        3. Permanent Account Number or any other identifier authorized by law of (i) & (ii)
        4. Phone and mobile numbers of (i) & (ii)

        Explanations: “Material Financial Relationship” shall mean a relationship as relationship in which one person is a recipient of any kind of payment such as by way of a loan or gift during the immediately preceding twelve months, equivalent to at least 25% of such payer’s annual income but shall exclude relationships in which the payment is based on arm’s length transactions.”

      2. The Designated Persons, who trade in Securities when in possession of UPSI in contravention of the provisions of this Code or Regulations, shall be liable to disciplinary actions, including wage freeze, suspension, recovery, claw back, etc., as may be decided by the Inquiry Committee formed pursuant to the Company’s Code of Practices and Procedures for Fair Disclosure of Unpublished Price Sensitive Information.

RECORDS OF DISCLOSURES RECEIVED BY THE COMPANY

      1. The Compliance officer shall maintain records of all the declarations in the appropriate form given by the Directors, Officers, and Designated Employees for a minimum period of five years. The Compliance officer shall place before the CEO / Board of Directors, on a monthly basis all the details of the dealing in the securities by the Designated Employees, Directors, Officers of the Company and the accompanying documents that such persons had executed under the pre - dealing procedure as envisaged in this code.

AMENDMENT

      1. The Board of Directors of the Company, subject to applicable laws, rules & Regulations, may amend / substitute any provision(s) with a new provision(s) or replace this entire Policy with a new Policy. However, in absence of such amendment / substitution to be made by the Board of Directors to the Policy, any subsequent modification to the provisions of the Act / Regulations shall automatically apply to this Policy.
      2. In any circumstance where the terms of this Policy differ from any law, rule, regulation etc. for the time being in force, the law, rule, regulation etc. shall take precedence over this Policy.
      3. This Policy and any subsequent amendment(s) thereto, shall be promptly intimated to the Stock Exchanges, if required under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and/or SEBI (Prohibition of Insider Trading) Regulations, 2015 and any amendment, re-amendment or re-enactment thereto.

APPLICABILITY

      1. This Code shall be applicable with effect from April 01, 2019.