New insider trading norms on anvil, delisting to get easier

New norms expected to cut down time taken for a company voluntary delisting from stock exchanges by about half

To make it easier for listed companies to comply with various regulations and to safeguard the interest of minority investors, regulator Sebi is set to bring out new set of norms for listing compliance, delisting of shares and for a better check against insider trading.

The changes in these regulations would be considered by the board of the capital markets regulator at its board meeting scheduled this week, a senior official said, adding that the main thrust of the proposed changes are safeguarding the interest of investors without making the regulatory framework cumbersome for listed companies and other entities.

Among the key changes, delisting regulations are set for a major overhaul and the new norms are expected to cut down the time taken for a company voluntary delisting from the stock exchanges by about half, from a minimum of 137 days currently.

The new norms are being put in place after long-running consultations with all stakeholders on draft regulations that were made public earlier this year, the official said.

While concerns have been raised from some quarters with regard to certain provisions, including those arising out of speculations that the new delisting rules might be somewhat retrospective in nature and that minimum 25 per cent shareholders' participation would be necessary, the official said that these concerns are unfounded.

There has not been any major opposition to the draft norms, the official said, adding that interest of all stakeholders has been kept in mind and the main objective to amend the norms is to make the entire process faster and easier rather than making it difficult.

One area where no compromise has been made and the rules are being made stringent is with regard to keeping additional checks against possible manipulation by using the long gestation period and other loopholes currently associated with a delisting process, the official said.

The new norms -- to check insider trading menace, to enforce better compliance to continuous listing regulations and to revamp delisting norms for a faster and easier process for those desiring to delist from the stock market -- will be put up for approval of Sebi's board this week. Thereafter, necessary changes would be made soon in the existing norms.

The proposed tightening of norms assumes significance in the wake of Sebi coming across cases of insider trading at not just small companies, but at big corporates as well.

Besides, another set of new regulations would help Sebi take prompter and stricter action against the entities found to be violating listing norms.

"We are revising our prevention of insider trading regulations because we have discovered cases... Unfortunately the cases are not just from small companies but also from big ones," Sebi Chairman U K Sinha recently said.

The new insider trading norms, which would replace nearly two-decade-old rules in this area, would be substantially based on recommendations of an expert committee constituted by the Securities and Exchange Board of India (Sebi) and the suggestions made thereafter to this panel's draft proposals.