GUIDELINES FOR INVESTMENT/TRADING IN SECURITIES BY EMPLOYEES OF EQUITYMASTER AGORA RESEARCH PRIVATE LIMITED (EARPL)
I. OBJECTIVES AND PRINCIPLES
- To ensure that all personal securities transactions are conducted consistent with these guidelines and in such manner as to avoid any actual or potential conflict of interest arising from such dealings or trading of securities or any abuse of an individual's position of trust and responsibility.
- No person to whom these Guidelines apply should take undue advantage of any price-sensitive information that they may have about any Company.
- To guide employees of EARPL in maintaining a high standard of probity that one would expect from an employee in a position of responsibility
- To promote objective and reliable research and to prevent the use of research report or research analysis to manipulate the securities market.
- Persons covered
These guidelines shall be applicable to:
- All the Employees of EARPL and its subsidiaries including its Whole-Time Directors (hereinafter referred to as "Employees");
Persons specified above are collectively called as 'persons covered' hereafter in these guidelines.
- Type of Holdings covered
These Guidelines cover transactions for sale or purchase of securities made
- in the name of the 'persons covered' as specified in Clause II(a) above, either individually or jointly with any other person; and also
- in the name of the spouse and/or dependent children and/or dependent family members of the 'persons covered'; and
- by the 'persons covered' as a member of a Hindu Undivided Family (HUF).
These Guidelines also cover transfer of securities made by the 'persons covered' in the name of his/her spouse and/or dependent children and/or dependent family members.
III. SECURITIES/INVESTMENTS COVERED
These Guidelines cover transactions for purchase or sale of any securities such as shares, debentures, bonds, warrants, derivatives and units of mutual fund schemes.
Investments not covered:
These Guidelines do not apply to the following investments by the 'persons covered':
- investments in fixed deposits with banks/financial institutions/companies, life insurance policies, provident funds (including public provident fund) or investment in savings schemes such as National Savings Certificates, National Savings Schemes, Kisan Vikas Patra or any other similar investment.
- investments of a non-financial nature such as gold, real estate etc., where there is no likely conflict between interest of EARPL and the employees' interest.
- investments in Government securities, money market instruments and money market mutual fund schemes.
- Investments made by a SEBI Registered Portfolio Manager (PM) on behalf of the 'persons covered' under a discretionary Portfolio Management Agreement between the 'persons covered' and the PM. However, pre-clearance for making the initial contribution to the Portfolio Manager has to be taken by the 'persons covered'.
- Investment in Mutual Funds including Tax Saver Mutual Fund schemes or in any other Tax Saver Instrument notified by the Government under the Indian Income Tax Act as such and in Tax Free Bonds. However pre-clearance of the Compliance Officer or the CEO is required for purchase or sale of any Scheme of Quantum Mutual Fund including Tax Saver Schemes of Quantum Mutual Funds.
IV. PRE-CLEARANCE OF PERSONAL INVESTMENT TRANSACTIONS
All 'persons covered', except the Compliance Officer, must apply in the form prescribed by the Company to the Compliance Officer of EARPL for prior approval of any transactions relating to 'securities covered' other than those expressly stated to be exempt under these guidelines. In case of transactions by the Compliance Officer, he/she shall apply to the CEO of EARPL. The decision of the Compliance Officer and the CEO shall be final and shall be binding on the 'persons covered'.
In case of investments in the Systematic Investment Plan (SIP) or Systematic Withdrawal Plan (SWP) of any scheme of Quantum Mutual Fund including Tax Saver Schemes of Quantum Mutual Funds., the 'persons covered' shall apply only at the time of first installment of the SIP.
In these guidelines, in the case of the Compliance Officer's own transactions for purchase or sale of 'securities covered' or disclosure or any other related matter, the term "Compliance Officer" wherever it appears, should be read as "CEO".
The Compliance Officer may co-ordinate with the Research Department of EARPL, wherever necessary, for the purpose of clearing requests of investment/trading in securities by the 'persons covered'.
V. CRITERIA TO BE FOLLOWED BY COMPLIANCE OFFICER FOR PRE-CLEARANCE OF A TRANSACTION
The Compliance Officer shall clear or approve the requests for pre-clearance of securities transactions, if the following conditions are met:
- if the shares/debentures/bonds/warrants of the company specified by the 'persons covered' in their pre-clearance application are not covered under the Monthly Analyst Priority List/Restricted List as finalized by the Head-Research for the relevant month.
- if the shares/debentures/bonds/warrants of the company or derivatives for which approval is sought by the 'persons covered' are not held or proposed to be recommended for any of its clients;
- in case EARPL has recommended the securities covered under the application, a period of thirty days before and ten days after the publication of a research report has lapsed.
- If the applicant is an Analyst, the shares/debentures/bonds/warrants are not from the sector, which the applicant is tracking and in case of initial public offer (IPO), the issuer is not principally engaged in the same type of business as companies that the Analyst follows or recommends.
- Notwithstanding anything contained in these Guidelines, such restrictions to trade or deal in securities may not apply in case of significant news or event concerning the subject company or based upon an unanticipated significant change in the personal financial circumstances of the applicant, subject to prior written approval of the CEO/Compliance Officer.
VI. EXEMPTION FROM OBTAINING PRE-CLEARANCE FOR TRANSACTIONS IN SECURITIES COVERED
- Notwithstanding what is stated in V (a) above, a 'person covered' may apply for 'securities covered' in a preferential offer, in cases where such a preferential offer is being made by a Company that belongs to the same industrial group as that of one in which the 'person covered' already has an investment, provided that such a preferential offer is made to all shareholders/debenture holders of such companies. Details of such applications made, however, should be intimated to the Compliance Officer.
- All 'persons covered' may apply for any rights offer of any company in which they are already shareholders and for additional rights (over and above the normal rights entitlement) shares without getting the clearance from the Compliance Officer. 'Persons covered' may also sell/renounce their rights entitlement without getting the clearance from the Compliance Officer. In case any 'person covered' wishes to purchase the "rights renunciations", he should get the clearance of the Compliance Officer for doing the same. Such purchases of rights renunciations should be done only at market prices. Details of any applications made in any rights issue, whether in the normal course, or through purchase of rights renunciations, shall be intimated to the Compliance Officer.
VII. VALIDITY OF APPROVAL
- The Compliance Officer will intimate his/her approval/disapproval to the application within 1 business day on a best effort basis.
- The approval of Compliance Officer for carrying out a transaction of sale or purchase of a security by 'persons covered' shall be valid for not more than 3 trading days from the date of approval.
- If a transaction approved by Compliance Officer has not been effected within the period not exceeding 3 trading days from the date of its approval, the 'persons covered' shall be required to obtain prior approval once again from Compliance Officer for effecting the said transaction.
VIII. COMPULSORY HOLDING PERIOD / RESTRICTION ON TRANSACTIONS
- All 'persons covered' shall hold their investments for a minimum period of 90 days from the date of purchase in order for the investments to be considered as being held for investment purposes. The said holding period shall also apply to purchases in the primary market (IPO), in which case the holding period would commence when the securities are actually allotted. Incase of derivatives, all 'person covered' shall hold their positions for minimum period of 5 trading days.
- All 'persons covered' must refrain from profiting from the purchase and sale or sale and purchase of any security within the compulsory holding period. However, in cases where it is done, the 'person concerned' shall provide a suitable explanation to the Compliance Officer, which shall be reported to the Board of EARPL at the time of review.
IX. MAINTENANCE OF RECORDS /OTHER MISCELLANEOUS RESTRICTIONS
- The Compliance Officer shall maintain a record of all requests for pre-clearance regarding the purchase or sale of a security, including the date of the request, the name of the 'persons covered', the details of the proposed transaction and whether the request was approved or denied and waivers given, if any, and its reasons.
- No 'person covered' shall purchase any security (excluding derivatives) on a "carry forward" basis or indulge in "short sale" of any security (excluding derivatives).
- No 'person covered' shall transact in derivatives directly or indirectly relating to shares of Companies listed on the Indian stock exchanges.
- 'Persons covered' who effect any purchase transactions shall ensure that they take delivery of the securities purchased, before selling them.
- Any transaction of front running by any 'persons covered', directly or indirectly is strictly prohibited. For this purpose, 'front running' means any transaction of purchase/sale of a security carried by any 'persons covered' whether for self or for any other person, knowing fully well that EARPL also intends to purchase/sell the same security for its clients. For the purpose of ascertaining that the 'persons covered' had no prior knowledge of EARPL intended transactions, the Compliance Officer may take a declaration in this regard from the 'persons covered'. Such declaration shall be included in the application form itself.
- Analysts in the company cannot buy/purchase the stocks from the sector they cover.
- Any transaction of self-dealing by any 'persons covered' either directly or indirectly, whether alone or in concert with another person is prohibited. For this purpose, 'self-dealing' means trading in the securities based on information which is price sensitive in nature and to which he has access by virtue of his office. Such declaration shall be included in the application form itself.
- On no account shall the 'persons covered' insist or even suggest to the brokers concerned to charge reduced brokerage, or accept any contract with a reduced brokerage charge.
- None of the 'persons covered' shall pass on information to anybody inducing him to buy/sell securities which are being recommended by EARPL.
- The Compliance Officer will keep track of the transactions of the 'persons covered' and recommendations of EARPL so as to ensure that there is no conflict of interest.
X. INVESTMENTS THROUGH PORTFOLIO MANAGERS
All 'persons covered' who wish to appoint SEBI registered Portfolio Managers shall submit a written application alongwith the initial contract to that effect to the Compliance Officer for pre-clearance of such investment. Such an application shall specify the following details:
(A) Details to be given by the 'persons covered':
- Amount of funds/initial contribution given to the Portfolio Manager for management;
- Nature of holding;
- Type of Portfolio Management Service whether Discretionary or non-discretionary.
(B) Details of the Portfolio Manager:
Address for Correspondence.
Besides above, if need be, the Compliance Officer can request for additional documents from the concerned 'persons covered'.
Once the application is approved by the Compliance Officer, the 'persons covered' shall submit a copy of his Portfolio Management Agreement entered with the Portfolio Manager.
Pre-clearance of the Compliance Officer will be required for subsequent additions or withdrawals to/from the initial portfolio.
XI. ROUTING OF TRANSACTIONS
All 'persons covered' shall inform EARPL of the name of the broker through whom they will do all their securities transactions. All Transactions in Securities shall be strictly routed through brokers specified by EARPL.
XII. PERIODIC DISCLOSURES
All 'persons covered' shall submit in the form prescribed by EARPL, details of their personal transactions of purchase or sale of securities to the Compliance Officer. These details shall be submitted as follows:
- details of transactions effected for purchase/sale of securities including transactions in rights entitlements through the secondary market within 7 calendar days from the date of transaction along with copies of contract notes.;
- details of allotment received against application for public and rights issues within 7 calendar days from the date of receipt of the allotment advice;
- a statement of holding in securities as on March 31, June 30, September 30 and December 31 every year within 10 calendar days from the end of the respective calendar quarters alongwith a copy of demat account statement for that quarter received from the Depository Participant (DP). A person covered may submit a declaration to the Compliance Officer in the event that she/he is unable to submit the statement of holding from his/her DP within the above prescribed period giving reasons for such delay;
- Detailed statement of transactions in securities at end of every month.
XIII. CONSEQUESNCES OF BREACH OF THESE GUIDELINES
Failure or breach to comply with these guidelines or any policies and procedures mentioned herein may result in disciplinary action against the Employee by the Board, including but not limited to a warning, fine, disgorgement, suspension, or termination of employment. In addition to sanctions imposed by the Firm, violations may result in referral to civil or criminal authorities where appropriate.
Transaction(s) effected without pre-clearance are subject, in the CEO's discretion (after consultation with Board Members, if required), to being reversed or, if the employee has made profits on the transaction(s), to disgorgement of such profits. Disgorged profits would be paid back to the Company.
XIV. REVIEW BY THE BOARD OF DIRECTORS
The Board of EARPL shall review the compliance of the guidelines in their periodical meetings. They may review the existing procedures and recommend changes in procedures based on the company's experience, industry practices or developments in applicable laws and regulations.