| Sources say a ‘case exists for tightening the duration’ |
Officials concede present time limits may be a bit of an overkill.
Can consider making depository directly communicate to stock exchanges as they have info on ownership changes.
D. Sampathkumar
Mumbai, Nov. 28 The Reliance Industries (RIL) stake sale in Reliance Petroleum (RPL) could have come into the public domain much earlier than it actually did but for the present norms on timing of disclosure on significant changes in ownership.
Mr Paresh Chaudhry, Group President of RIL, said that the company informed RPL about the stock sale within the stipulated time frame under SEBI Regulations. Further, RPL in turn informed the stock exchanges within the time frame stipulated for such disclosure.
SEBI Regulations prohibiting insider trading says that an investor who has in excess of five per cent of the stake in a company has to disclose any transaction that has the effect of altering his ownership stake by more than 2 per cent. It has to do so within four working days following the day when its trade resulted in crossing the 2 per cent threshold.
RIL claims that it had put through a series of transactions (the company wouldn’t say from when) of sales and that the transactions of November 14 resulted in the above limit being breached. It informed RPL, its sister company, on November 19, that it has sold 2.54 per cent of its total stake in the company.
The timeline, RIL contends, is within the 4 working days limit set by SEBI for such disclosure. RPL in turn informed the stock exchanges of the sale on November 26. This again is within the SEBI norms, as the latter allows a company to communicate to the stock exchanges within five working days following an investor’s disclosure.
Curiously however, RPL did not have to take recourse to the extended deadline allowed by SEBI when the second tranche of stake sale took place. Between November 15 and 23 RIL divested a further 1.47 per cent stake in the company and informed RPL of having done so. But RPL was able to inform the stock exchange on the first working day itself since the RIL’s disclosure.
Officials in SEBI that Business Line spoke to concede that, the present time limits may be a bit of an overkill at a time when the whole country is well networked with IT and telecommunication infrastructure. Indeed, they even agreed with a suggestion from this correspondent that there is perhaps even a case for making the depository directly communicate to the stock exchanges as they have the information on ownership changes.
Such a recourse would eliminate the possibility of any motivated delay in communicating to the stock exchanges. Incidentally, regulations impose more stringent norms of disclosure on company directors and officers when they deal in shares. As to the suggestion whether these ought not to apply to dealings by ‘group’ companies as well by suitably amending the law dealing with insider trading, the sources further said that the proposal needs to be examined in some detail.
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