Insider Trading

For Management

In simple terms, "insider trading" denotes buying/selling the shares of a company by persons connected with the company, while they are in possession of or having access to unpublished price sensitive information. Persons connected with the company include Directors, Officers, Employees and dependants of the respective entities, consultants, advisers, etc. Unpublished price sensitive information can be defined in simple terms as information relating to a company, which has not yet been made available publicly, but which information when made available publicly, can materially impact the price of the company's shares. Price sensitive information includes periodical financial results, intended declaration of dividends, issue or buy-back of shares, major expansion plans, proposed amalgamations, takeovers, significant changes in the company's plans or operations, etc.

Insider trading can result in certain persons gaining at the expense of others, by virtue of their possession of unpublished price sensitive information. This may result in undermining investor confidence and may adversely impact the development of capital markets.

The Securities and Exchange Board of India (SEBI) has passed the SEBI (Prohibition of Insider Trading) Regulations, 1992, read with the Amendment Regulations , 2008 or any amendments to be made from time to time, to prohibit such insider trading, and these regulations, as amended to date, impose significant responsibilities on companies and persons connected with the company in this respect.

The SEBI Regulations also require all listed companies to frame a Code of Conduct, which would inter-alia require Designated Persons, (which expression would include Directors, Officers, Employees at certain senior levels or such employees and the dependants of the respective entities as may be specifically identified for the purpose of the Code), to :

The SEBI Regulations also require the Code of Conduct to be applicable to the dependants of the Designated Persons.

It is important to note that the SEBI Regulations also prohibit an insider from communicating unpublished price sensitive information relating to the Company, to any person. Any communication required to be made in the ordinary course of business or profession or employment, or under any law, is however outside the scope of this prohibition.

A copy of the SEBI Regulations is enclosed for your perusal.

Insiders who violate the SEBI Regulations are liable to a penalty of upto Rs.25 crores or three times the amount of profits made out of insider trading whichever is higher (or such amount as may be amended from time to time by SEBI) that may be imposed by SEBI and shall also be punishable with imprisonment for a term which may extend to ten year, or with fine which may extend to twenty-five crore rupees, or with both.(as may be amended by SEBI from time to time.

SEBI may, in addition to the above, also pass directions to the defaulting insider, not to deal in the concerned shares in any particular manner and/or prohibit him from disposing of the concerned shares and/or declaring the concerned transactions as null and void, etc.

The Company is also empowered to take action against the defaulting Officer/ Employee/Director. Such action may include wage freeze, suspension, ineligibility for future participation in employee stock option plans (if applicable), etc. The Company is required to report to SEBI of any violations of the SEBI Regulations.

As a designated person (being a Director /Officer/ an employee at certain senior level / an employee specifically identified for the purpose of this Code, and your dependants your responsibilities include the following:

Every Designated Person is required to furnish in Hinduja Global Form 1, the names of his dependants, his relationship with them and the initial holdings in Hinduja Global shares and position taken in derivatives of self and dependants.

For the purpose of this Code, "dependants" includes the following:

Newly appointed Directors and Officers of the Company are required to make initial disclosure of holdings and position taken in derivatives of self and dependants , in SEBI Form B

Every Designated Person is required to make half-yearly disclosure in Hinduja Global Form 2 of all transactions in Hinduja Global shares, entered into by self and by dependants.

The schedule for disclosure is as under:

In case there are no transactions during the half-year concerned, a NIL statement needs to be submitted.

Every designated person and their dependants, are prohibited from buying or selling Hinduja Global shares during "closed periods".In case of ESOPs, exercise of option is allowed during close period. However, sale of shares allotted on exercise of ESOPs shall not be allowed during closed period.

A closed period may either be fixed in advance or may be event-based (and therefore fixed on the occurrence or likelihood of occurrence of any special event.)

The following periods are hereby notified as fixed closed periods

In the event it is decided not to take on record the unaudited financial results for the fourth quarter and full year, and instead, it is decided that the Board would approve the audited results for the full year, then the fixed closed period only for the last quarter would be from the date of intimation to the Stock Exchanges of the date of the said Board Meeting convened to consider the annual audited financial results up to 1 calendar day after the date of the Board Meeting to approve the audited financial results for the full year. This presupposes that no meeting will be held during April of that year for consideration of the unaudited financial results of the fourth quarter.

In each case, the date of the relevant Board Meeting will be notified for the information of designated persons. It may be noted that since the beginning of the fixed closed periods as above is pre-determined, no separate communication to this effect is required to be given. However, the Compliance Officer will normally issue a circular to the designated persons as an aide-memoire.

Illustration 1: The Board Meeting to take on record the unaudited financial results for the third quarter ending 31st December, is scheduled to be held on 27th January. The fixed closed period commences on 15th January and continues upto and including 28th January. Designated persons can transact in Hinduja Global shares from 29th January onwards.

Illustration 2: The Board Meeting to take on record the unaudited financial results for the year ending 31st March is scheduled to be held on 29th April. The fixed closed period commences on 15th April and continues up to and including 30th April. Designated persons can transact in Hinduja Global shares from 1st May onwards.

In this illustration, if it is assumed that without taking on record the unaudited results, the Board decides to approve the audited results for the financial year, and the Board Meeting for this purpose is scheduled to be held on 15th May, and Company intimates to Stock Exchanges about Board Meeting for consideration of audited results on 5th May then the fixed closed period commences on 5th May and continues up to and including 16th May. Designated persons can transact in Hinduja Global shares from 17th May onwards.

Event based closed periods will necessarily be notified by the Compliance Officer, as per requirement, by way of a circular. Typically, events which may require notification of event based closed periods include intended declaration of interim dividend, proposal for issue of bonus shares, proposal for buy-back of shares or issue of rights shares or proposal for merger, etc.

For Designated Persons not directly involved in the management decision giving rise to the event based closed period, the closed period will commence 2 working days after the issue of the circular. For designated persons directly involved in the decision, the closed period will however commence immediately on the taking of the relevant management decision. The closed period will end 1 calendar day after the date of the Board Meeting to consider the relevant management decision. The date of the Board Meeting will be notified for the information of Designated Persons.

It may be noted that the 2 working day grace period provided to certain designated persons in the above paragraph is to provide for transit related delay of receipt of the circular, so as to take care of any inadvertent transaction that may have taken place in good faith in the meantime.

Special closed periods for certain employees: Since special events which give rise to event based closed periods, may require certain pre-work involving certain concerned employees, such concerned employees may be subject to an additional closed period, commencing when they are assigned the required pre-work responsibility. This would be notified to the concerned employees and this extra closed period would apply only to the concerned employees and the management personnel involved in the decision. Such employees/management personnel are required not to disclose the fact of the special closed period to others, so that employees are generally not made aware that some special event is under consideration.

Illustration: On 15th January, the CEO directs the CFO to prepare a proposal for payment of interim dividend, with the help of the Head - Accounts. The event based closed period for the above three persons commences on 15th January. On 18th January, the CEO discusses the proposal with the Chairman and a management decision is taken to place the proposal before the Board. The same day, the Company Secretary is directed to issue notices to the Directors and the Stock Exchanges that a Board Meeting for the purpose of considering interim dividend would be held on 30th January. The event based closed period for the Chairman and the Company Secretary commences on 18th January. The Company Secretary issues the aforesaid notices on 19th January and circulates the information. The event based closed period for all other designated persons would commence on 22nd January so as to provide for a two days grace period for receipt of the notice/circular. However, designated persons who receive the notice/circular/information during this 2 days grace period are expected to act in good faith and not misuse the same.

It must be appreciated that the above illustration may be an over-simplification and every special event (including the above) may involve different persons and peculiar circumstances specific to that event, which cannot all be encapsulated by way of examples. The above is an attempt to illustrate the principle involved.

All Directors /Officers/designated employees who buy or sell any number of shares of Hinduja Global shall not enter into an opposite transaction i.e. sell or buy any number of shares during next six months following prior transaction. All Directors/Officers / Designated employees shall also not take positions in derivative transactions in the Hinduja Global shares at any time.

In the case of subscription in the primary market (initial public offers) the above mentioned entities shall hold their investments for a minimum period of 30 days. The holding period commence when the securities are actually allotted. The holding period cannot be relaxed by the Compliance Officer for any reasons.

It needs to be specially noted that "day trading" by designated persons in Hinduja Global shares is effectively prohibited.

Every designated person and their dependents is required to obtain prior clearance of the Compliance Officer in Hinduja Global Form 3, before he or any of his dependants buys or sells over 1000 Hinduja Global shares in a single transaction or in a series of transactions within 7 calendar days of each other.

Special attention of designated persons is drawn to the declaration and undertaking which forms an important and integral part of the application for pre-clearance.

The pre-clearance would be granted not later than the close of business hours of the next working day following the receipt of the application in Hinduja Global Form 3. A pre-clearance number would ordinarily be given for administrative purposes. In the event the pre-clearance is neither granted nor refused within this period, the pre-clearance is deemed to be granted.

Illustration 1: Mr. ABC proposes to purchase 1001 Hinduja Global shares on 1st September. This requires pre-clearance since it exceeds the threshold limit of 1000 Hinduja Global shares.

If in this illustration Mr. ABC proposes to purchase 500 Hinduja Global shares on 1st September, and Mrs. ABC proposes to purchase 501 Hinduja Global shares on the same date, both transactions will require pre-clearance, since the aggregate exceeds the threshold limit of 1000 Hinduja Global shares.

Illustration 2: Mr. ABC proposes to purchase 500 Hinduja Global shares on 1st September. Mrs. ABC proposes to purchase 501 Hinduja Global shares on 5th September. The second transaction requires pre-clearance since it falls within 7 calendar days of the first transaction and the aggregate exceeds the threshold limit of 1000 Hinduja Global shares

Illustration 3: Mr. ABC proposes to purchase 500 Hinduja Global shares on 1st September. Mrs. ABC proposes to purchase 500 Hinduja Global shares on 5th September. Neither transaction requires pre-clearance since the aggregate does not exceed the threshold limit of 1000 Hinduja Global shares.

In this illustration, however, if Master ABC (a dependant of Mr. ABC) proposes to purchase 1 Hinduja Global share on 10th September, then this third transaction would require pre-clearance, since it would fall within 7 calendar days of the second transaction and the aggregate of all such transactions within 7 calendar days of each other, exceed the threshold limit of 1000 Hinduja Global shares

A pre-clearance, once granted, is valid for a period of 7 calendar days after the date of grant. If the designated person does not transact the pre-cleared transaction within this period, he is required to apply once again, for pre-clearance.

It may be noted that if a closed period commences during the 7 calendar days period following the grant of pre-clearance, the validity of the pre-clearance comes to an end, since no transaction (whether pre-cleared or not) can be made by designated persons or their dependants, during closed periods.

Illustration 4: Mr. ABC applies for pre-clearance on 11th October and pre-clearance is granted on 12th October. Although the pre-clearance is normally valid for 7 calendar days after the date of grant, in this case, the pre-clearance will be valid only for 3 calendar days, i.e. upto 15th October, since a fixed closed period commences on 15th October

It is extremely important for designated persons to note that transactions made just prior to the commencement of closed periods may be subject to extra scrutiny by regulatory authorities, in the event of any investigation. Designated persons should care to ensure that they do not consummate any transaction if they are in possession of unpublished price sensitive information. Please also refer to the declaration / undertaking reproduced in Hinduja Global Form 3 in this connection. It may be further noted that the threshold limit of 1000 would apply in respect of only one type of transaction, i.e. buy or sell.

Illustration 5: Mr. ABC buys 800 Hinduja Global shares on 1st September and sells 400 shares on the same date. The total number of shares involved is 1200, which is above the threshold limit of 1000. The requirement for pre-clearance is however not attracted, since the transactions are not of the same type i.e. one is a sale transaction and the other is a purchase transaction.

In this illustration, Mr. ABC would however also need to ensure compliance with the minimum holding period of six months as mentioned in Para 8 above. He should ensure that the 400 shares sold by him on 1st September, are out of his pre-existing holdings, which were purchased by him at least six months prior to the date of sale. He should also ensure that he holds the 800 shares purchased by him on 1st September, for a period of six months.

Any person who holds more than 5% of Hinduja Global shares is required to disclose his holdings to the Company, in SEBI Form A, within 2 working days of becoming such holder. ( 2 working days apply to both initial holding and changes for this category of holder)

Any subsequent increase or decrease in shareholding, exceeding 2% of Hinduja Global shares, is also required to disclosed to the Company in SEBI Form C, within 2 working days of such increase or decrease even if such change results in shareholding falling below 5 % .

Special attention is drawn to Clauses 13(1), 13(3) and 13(5) of the SEBI Regulations.

As mentioned in Para 5 above, newly appointed Directors and Officers of the Company are required to make initial disclosure of holdings of self and their dependants of the shares of the Company and positions taken in derivatives by such persons and their dependants , in SEBI Form B to the Company as well as to the Stock Exchanges within 2 working days of appointment

On an ongoing basis, Directors, Officers need to disclose the number of shares held and change in their shareholding and dependants from the last disclosure as mentioned in aforesaid para, and such change exceeds Rs. 5 lakhs in value or 25000 shares or 1% of the total shareholding or voting rights HINDUJA GLOBAL shares whichever is lower, in SEBI Form D within 2 working days of the transaction.

Special attention is drawn to Clauses 13(2), 13(4) and 13(5) of the SEBI Regulations.

Every designated person is required to maintain strict confidentiality of unpublished price sensitive information and is prohibited from communicating or counseling or procuring directly or indirectly such information to any person who while in possession of such unpublished information shall not deal in the shares of the Company . Special attention is drawn to Clause 3(ii) of the SEBI Regulations. Any communication required to be made in the ordinary course of business or profession or employment, or under any law, is however outside the scope of this prohibition.

Price sensitive information should be disclosed only to those within the company who need the information to discharge their duty. Files containing confidential information (both physical as well as computer files) are required to kept secure.

If a person ceases to be a designated person on retirement, resignation, etc, he would thereupon cease to be subject to this Code of Conduct. However, it must be noted that such person would nevertheless continue to be an Insider for a period of 6 months from separation, and would therefore continue to be subject to the SEBI Regulations during this period.

As a designated person, you are required to familiarize yourself with the SEBI Regulations and comply with the same, as well as with this Code of Conduct., both in letter and in spirit. You are also required to ensure compliance by your dependants.