Bourses ask cos to strictly comply with 'trading window' rules

With Sebi tightening the norms for timely disclosure of key information by listed firms, stock exchanges have asked companies to strictly adhere to prohibition on trading by 'insiders' during restricted periods.
The exchanges have directed the companies to specify a trading period, or 'trading window' during which time the employees and directors will be allowed to deal in securities of their respective firms.
However, the window will be closed during the time when information related to company's financial results, dividends, among others, remain 'unpublished'. The employees/directors of the firm would be prohibited to deal in securities during the time when trading window is closed.

As per the stock exchanges, the firms will have to close the trading window at the time of declaration of financial results, dividends, issue of securities through public/rights/bonus, any major expansion plans or execution of new projects.
Besides, the trading window will also be closed during amalgamation, mergers, takeovers and buy-back, disposal of whole or substantially whole of the undertaking and any changes in policies, plans or operations of the company.
A trading window can only be opened 24 hours after such information is made public.

The time for commencement of closing of trading window shall be decided by the company.

In the case of ESOPs (employee stock options plan), exercise of option may be allowed in the period when the trading window is closed.
However, sale of shares allotted on exercise of ESOPs would not be permitted when trading window is closed.
Aiming to prevent large-scale discrepancies in mandatory disclosures by listed firms, Sebi, in November last year, had tightened the norms in this regard and asked bourses to put in place a stronger mechanism with additional manpower to monitor adequacy and accuracy of such disclosures.
As per the norms, the companies would have to provide the details of their promoters, directors and/or key management personnel who would be held responsible for ensuring compliance with the disclosure norms, while stock exchanges had been asked to publish these details on their websites in case of defaults.

Hundreds of companies have been found to have failed in making adequate and accurate disclosures even in routine filings like financial results, shareholding patterns and corporate governance reports.