The
Securities and Exchange Commission of Pakistan has issued a
notification under Section 15D of the 1969 Securities and Exchange
Ordinance read with section 40B of the 1997 Securities and Exchange
Commission of Pakistan Act to specify the manner and form for the
disclosure of inside information by the listed companies and by the
persons discharging managerial responsibilities in listed
companies.
The
notification will result in clearly defining the roles and
responsibilities of the company as well as the person possessing the
information. It also
describes the obligation of stock exchanges with respect to
dissemination of information so that no person takes undue advantage of
the inside information. Now the Commission will be in a better position
to prosecute the persons involved in insider trading
as the presence of newly introduced statutory obligation will restrain
the persons alleged of insider trading from citing legal justifications
for their illegal acts in the presence of clear requirements. It is
pertinent to mention here that dissemination
of material information by the listed companies through the stock
exchanges is also a requirement of listing regulations.
The
said provision of the 1969 ordinance states the obligations of persons
including listed companies, persons who possess inside information, the
persons
discharging managerial responsibilities in listed companies with
respect to discloser of information and persons associated with the
persons discharging managerial responsibilities in a listed company.
Accordingly, the SECP in line with international practices
and the existing provisions of the law, has approved a consolidated
statutory form to meet the requirements of Section 15D of the ordinance,
whereby, the Commission has specified the mode to disclose the
requisite information to Commission and the public (through
the stock exchanges).
Insider
trading is the trading in the shares of a listed company by insiders
with access to non-public information about the company. Information is
"inside
information" if it is price-sensitive and has not been publicly
disclosed. Generally, trading by corporate insiders such as officers,
key employees, directors, and large shareholders may be legal, if this
trading is done in a way that does not take advantage
of non-public information. The statutory requirements to disclose
inside information are central to the orderly operation and integrity of
the stock market and underpin the maintenance of a fair, transparent
and informed market.
The
notification has specified the minimum standards with which listed
companies and other aforementioned persons are required to comply with
respect to
inside information. It is the obligation of listed companies that the
disclosure should be made in a manner that provides for equal, timely
and effective access by the public to the price-sensitive information.
The
notification issued by the apex regulator states that all the listed
companies as well as the persons specified above shall immediately file
with the
Commission and communicate the same simultaneously to the stock
exchange(s) on which these are listed, the details as to the inside
information and ancillary matters in the Form annexed to this
notification upon the occurrence of any one or more of the events
which may affect the price of a listed security. The stock exchanges
shall immediately disseminate the material information and also ensure
posting of same on their website. Furthermore, for the purpose of
Section 15D(4), listed companies or persons acting
on their behalf, shall maintain and regularly update the list of
persons employed, under contract or otherwise, who have access to inside
information.
The notification has been placed on the SECP’s website for the information of all stakeholders.
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