Guide to PIT Documentation

By Vinod Kothari & Company (

Comprehensive changes were done in SEBI (Prohibition of Insider Trading) Regulations, 2015  (‘PIT Regulations’) vide SEBI (Prohibition of Insider Trading) Amendment Regulations, 2018[1] (effective from April 1, 2019). Recently, minor amendment has also been made in disclosure requirements by members of promoter group vide SEBI (Prohibition of Insider Trading) Amendment Regulations, 2019[2] (effective from January 21, 2019)

Post these changes, listed companies are required to put in place a system of internal controls, with responsibility being cast at various levels, including the Board of Directors, audit committee, CEO, and compliance officer. There will also be required comprehensive data keeping, when information is shared on need-to-know basis with people inside the organisation and those outside. While putting in place appropriate internal controls on insider trading is not merely a matter of documentation, proper documentation is to key to a structured, guided approach to these controls, serving both as a source of reference, as also a checklist to take stock of what all is required to be done.

The following is a quick guide to the needed documentation:

Document Intended for Broad contents
Internal Control Manual – non-public document The BoD, audit committee and the CEO, Compliance Officer, laying down the organisation-wide approach to defining UPSI, identification of places where UPSI may arise, ensuring integrity and security of UPSI, manner of disclosure of UPSI, etc.
  • Meaning of UPSI, when is an information to be regarded as price-sensitive, determination of whether the information is price-sensitive;
  • Organisational commitment to ensuring integrity of UPSI and building compliant culture;
  • Identification of typical places/divisions where UPSI may arise, with illustrative situations;
  • Ensuring adequate firewalls, Cyber Security for safeguarding UPSI;
  • Manner of transmission of UPSI to insiders;
  • Manner of transmission of UPSI by bringing persons “inside”;
  • Communication of UPSI to stock exchanges and press;
  • Determination of leaks of UPSI;
  • Role of various functionaries

o   BoD

o   Audit Committee

o   CEO

o   Compliance officer

  • Review of efficiency of internal controls by audit committee

o   Frequency of review

o   Manner of review, with reference to events which were regarded as UPSI, whether such UPSI were shared in the manner expected, instances of leaks, if any, instance of breaches of the Code, efficiency of sensitization process, etc.

o   Strengthening of internal control

  •  Whistle blower mechanism, dissemination of the same, nodal officer and point of contact for whistle blowers;
  • Periodic sensitization of employees of the organisation in terms of requirement under the Regulations and the Code.


Code of Conduct to Regulate, Monitor and Report Trading by -non-public document All designated persons
  • Scope and objective,;
  • Definition of DP;
  • Policy in relation to access to UPSI on need-to-know basis;
  • Functions of the Compliance Officer;
  • Threshold for seeking pre-clearance;
  • Formats for seeking pre-clearance, reporting of trade, initial disclosure, annual disclosure and continual disclosure, personal information;
  • Restriction in relation to contra trade, period of closure of trading window, maintenance of restricted list;
  • Penalty in case of contravention of the Code.


Code of Fair Disclosure – public document The listed entity – its approach to handling disclosures
  • Determination of Chief Investor Relation Officer;
  • Determining legitimate purpose for sharing of UPSI;
  • Principles of Fair Disclosure;
  • Manner of Disclosure;
  • Amendments informed to stock exchange and amended code to be uploaded on website.
Compliance Manual Compliance Office
  • Role of the Compliance Officer wrt UPSI and insider trading
  • Origination and transmission of UPSI

o   Periodic checks to ensure that determination and transmission of UPSI was done in accordance with the Internal Control Manual

o   Maintaining digital database for sharing UPSI with insiders and outside, except relevant DPs. Ensuring that the digital database platform for DPs is tamper-proof, searchable, and date-stamped

o   Coordinating with the Determination committee on applying tests of materiality whether an information is UPSI or not

  • Disclosure of UPSI to stock exchanges
  • Designated persons

o   Defining and identifying DPs

o   Obtaining data about DPs

  • Identification of black-out periods

o   Generic black outs

o   Selective black outs

o   Restricted/ Grey list

  • Granting of permission to trade when trading window is open

o   Obtaining declarations

o   Sensitising the individual about the provisions of the Regulations

  • Monitoring of trading pattern of DPs to detect any trades that may potentially be breaching the PIT Regulations and the Codes
  • Handling breaches of the Regulations and the Code

o   By DPs;

o   By employees;

o   By other insiders

  • Employee sensitization program and other interface

o   Sensitising senior management about silence period, role and responsibilities in disclosure of information, investor meets, analyst meets, etc.

o   Sensitising employees about the Regulations and Codes

o   Answering queries

  • Periodic reporting to Chairman of Audit Committee.
  • Investigation and action to be taken upon leakage

o   Detection of leak;

o   Identifying manner of leak;

o   Escalation of information and producing before Audit Committee;

o   Action against the guilty;

o   Informing SEBI, sensitizing employees, plugging the gaps.






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