Introduction:
Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015 [‘PIT 2015’] mandates closure of trading window. Point 4 of Schedule B of PIT 2015 casts a responsibility on the compliance officer to close the trading window when he is of the opinion that designated persons are reasonably expected to have access to unpublished price sensitive information.
Disclosure of trading window closure
PIT 2015 does not provide for disclosure of trading window closure to stock exchange. Bombay Stock Exchange (‘BSE’) and National Stock Exchange (‘NSE’) vide their circular dt: April 2,2019 stated as follows: “ As discussed with SEBI, this amendment has to be read in conjunction with the existing provision of Clause 4 of the Schedule B (wherein compliance officer determines that a designated person or class of designated persons can reasonably be expected to have possession of unpublished price sensitive information). In any case, the trading restriction period is required to commence not later than end of every quarter till 48 hours after the declaration of financial results”. Pursuant to this listed companies started intimating window closure with respect to financials to stock exchange on a quarterly, yearly and half yearly basis. Disclosure is required to be given to BSE and NSE at the end of quarter in pdf format.
BSE and NSE vide their circular dt: December 8, 2023 [‘December Circular’] mandated inter-alia filing of intimation of disclosure of trading window closure in XBRL form. BSE and NSE vide their circular dt: October 20, 2015, had stated that BSE and NSE would be introducing XBRL format of filings for all disclosures to be to stock exchanges. BSE and NSE vide same circular also highlighted importance of making submission in XBRL. BSE and NSE stated as follows, “By implementing XBRL reporting, BSE will have faster, more reliable, and more accurate handling of data along with improved analysis and better quality of information and decision-making. Human effort can switch to higher, more value-added aspects of analysis, review, reporting and decision-making. This data, when accessed by investment analysts can save effort, greatly simplify the selection and comparison of data, and deepen their company analysis. Lenders can save costs and speed up their dealings with borrowers. Regulators and government departments can assemble, validate, and review data much more efficiently and usefully than they have hitherto been able to do. XBRL reporting will enable reporting companies and consumers – (Investors, Analysts, Lenders, Regulators & governments) of financial data to switch resources away from costly manual processes, typically involving time-consuming comparison, assembly, and re-entry of data. They will be able to concentrate effort on analysis, aided by software which can validate and manipulate XBRL information”.
Article below underlines anamolies arising out of this new criterion. It also provides detailed analysis of columns used and disclosures required to be given in XBRL form.
The Proforma of XBRL submitted to stock exchange for trading window closure.
| Closure of Trading Window | |
| Name of the Company* | ABC LIMITED |
| NSE Symbol* | TOTAL |
| BSE Scrip Code* | 000000 |
| MSEI Symbol* | NOTLISTED |
| ISIN* | INE0000000000 |
| Type of Announcement* | New |
| Type of Event | Closure of Trading Window |
| Date of original announcement | |
| Trading Window Closure- Start date* | |
| Trading Window Closure- End date | |
| Brief details for Trading Window Closure End date | Trading window for dealing in equity shares of the Company shall remain closed from trading hours of January 01, 2023 till 48 hours after the declaration of the Unaudited Financial Results for the quarter ended December 31, 2023 for all the Directors, Designated Persons, Insiders, and their Immediate Relatives. |
| Purpose of the Closure of Trading Window | Financial Results |
| Any other disclosure w.r.t. compliance of any SEBI Act, Regulation, Circular or provision | |
| Any other information | |
| Remarks (website dissemination) | |
| Remarks for Exchange (not for Website Dissemination) | |
| Date of Report | 09/01/24 |
XBRL utility and its anomalies:
- End date of trading window closure: Currently listed entities intimate ‘closure of trading window’ in pdf form. Listed entities while submitting disclosures in pdf form mention as follows, “In terms of the Company’s Code of Conduct under the SEBI (Prohibition of Insider Trading) Regulations, 2015, the trading window for dealing in the securities of the Company will be closed for Designated Persons of the Company from July 1, 2023 and the same will remain closed till 48 hours after the dissemination of the Unaudited Financial Results (Consolidated and Standalone) of the Company for the quarter ended June 30, 2023. The details of board meeting for approval of unaudited financial results for the quarter ended June 30, 2023, shall be intimated in due course of time” On perusal of the language of intimation of trading window closure it is seen that listed entities used to mention that trading window would open 48 hours after board meeting date. Listed entities were not mentioning the board meeting date or were not required to mention board meeting and consequent date of opening of trading window.
Now the XBRL utility announcements is also seeking ‘end date of trading window closure’. In XBRL exact date would have to be mentioned as can be seen in the picture above. So, this means board meeting date will have to be fixed by the companies before the quarter ends. Many companies would not have practice of fixing board meeting dates at the time of end of quarter.
Considering this it needs to be noted that the disclosure of trading window closure made in XBRL form also provides for filing of ‘revised XBRL utility’. So once XBRL for trading window closure is filed specifying tentative date of board meeting and opening of trading window then after the board meeting is fixed or confirmed and it is different from the board meeting date intimated earlier i.e. at the time of intimating initial trading window closure then revised XBRL would be required to be filed. If the trading window opening date is revised due to change in board meeting date, then company will have to give a pdf intimation as well intimating revised ‘trading window opening date’.
- Aligning start date of trading window start date: Start date of trading window closure is also required to be submitted to BSE and NSE in XBRL form filed for giving intimation under Regulation 29 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. BSE and NSE had vide their circulars dt: January 27, 2023 made it mandatory for listed entities to submit prior intimation to stock exchange under Regulation 29 in XBRL form. XBRL utility of Regulation 29 disclosure requires listed entities to mention ‘start date of trading window closure’ for all events or information for which prior intimation is being given to stock exchange. December circular requires listed entities to disclose start date of trading window closure only with respect to submission of financial results. So, it needs to be highlighted that listed entities should ensure that ‘trading window closure start date’ as submitted as per December circular and as submitted pursuant to BSE and NSE circular dt: January 27, 2023 shall be aligned.
- Trading window closure intimation only for financial results or for all unpublished price sensitive information? Pursuant to BSE circular dt: April 02, 2019, listed entities provided disclosure of trading window closure period only with respect to financial results as this circular provided for trading window closure particularly with respect to announcement of financial results. Since this circular was indicating towards window closure particularly for announcement of financial results a view can be taken that disclosure of trading window closure as per December circular both i.e. PDF and XBRL both fillings would now be required in case of announcements of financial results. Further PIT 2015 provides for sharing of unpublished price sensitive information on need-to-know basis. So even if XBRL utility for trading window closure intimation provides for intimation of trading window closure for events and information other than quarterly, half yearly and yearly financial results, disclosure of start date of unpublished price sensitive information in other scenarios is not mandated by PIT 2015 and hence need not be disclosed.
Conclusion:
Further BSE and NSE Circular dt: December 8, 2023, the mandatory filings in XBRL format will apply to the following key announcements under SEBI LODR:
- Loss of Share Certificate/Issue of Duplicate Share Certificate: Companies experiencing a loss of share certificates or issuing duplicate certificates will now be required to submit related disclosures in XBRL format.
- Corporate Insolvency Resolution Process: Disclosures related to the initiation of Corporate Insolvency Resolution Process (CIRP) will now be submitted in XBRL format, contributing to a more standardized and efficient reporting system.
December circular further mention that during the initial stage, the stock exchanges will accept PDF filings as compliance under Regulation 30 of SEBI LODR. However, listed entities must also submit the filings in XBRL mode within 24 hours of the PDF submission. This dual-filing approach aims to facilitate a smooth transition to XBRL reporting. It is essential for companies to note that, at a later stage (with the date to be informed separately), stock exchanges will shift to accepting only XBRL submissions. The move towards XBRL filings represents a significant step in aligning reporting practices with global standards and enhancing the efficiency and accuracy of disclosures. Listed companies are encouraged to familiarize themselves with the XBRL utility and leverage the online Helpdesk for a smooth transition. By adhering to the specified timelines and requirements, companies can not only ensure compliance with regulatory obligations but also contribute to the overall improvement of the reporting ecosystem in the Indian financial markets.
This article is published in Taxmann. The link to the same is as follows: –
This article is written by CS Vallabh M Joshi – Senior Manager – vallabhjoshi@mmjc.in