To ensure compliance with the requirements given in the SEBI (Prohibition of Insider Trading) Regulations, 2015, and to prevent insider trading, the listed company has to put in place an effective system of internal controls viz.

1. All employees who have access to UPSI are identified as designated employees. 
2. All UPSI shall be identified and its confidentiality shall be maintained as per the requirements of the SEBI (Prohibition of Insider Trading) Regulations, 2015 
3. A list of all employees and other persons with whom UPSI is shared shall be maintained and confidentiality agreements shall be signed or notice shall be served to all such employees and persons. 
4. Adequate restrictions shall be placed on the communication or procurement of UPSI, as required by the SEBI (Prohibition of Insider Trading) Regulations, 2015.

No insider shall trade in securities that are listed or proposed to be listed on a stock exchange when in possession of unpublished price sensitive information. That is trading in securities while in possession of UPSI is prohibited as per the regulations. These regulations come under the purview of the SEBI (Prohibition of Insider Trading) Regulations, 2015.

Trading as defined under Regulation 2 (1) (l) means and includes subscribing, buying, selling, dealing,  or agreeing to subscribe,  buy,  sell,  deal in any securities,  and  "trade" shall be construed accordingly. 

The term trading is widely defined to include dealing in securities and intended to curb the activities based on unpublished price sensitive information (UPSI) which are strictly not buying,  selling or subscribing,  such  as  pledging etc.  Hence,  trading would include creation/invocation/revocation of pledge.

Regulation 2(1) (g) of SEBI (PIT) Regulations, 2015 defines ‘insider’ as any person who is: 

• a connected person; or
• in possession of or having access to unpublished price sensitive information.

Therefore, even if a person is not classified as a designated person, having access to UPSI would make such a  person an  ‘insider’.

As per  Regulation  4 (1) of SEBI  (PIT)  Regulations,  2015, an insider is prohibited to trade while in possession of UPSI.

UPSI means  any  information,  relating  to  a company or its securities, directly or indirectly, that is not generally available which upon becoming generally available, is likely to materially affect the price of the securities and shall, ordinarily including but not restricted to, information relating to the following: 

1. financial results;
2. dividends;
3. change in capital structure; 
4. mergers, de-mergers, acquisitions, delisting, disposals, and expansion of business and such other transactions; 
5. changes in key managerial personnel

When a  person who has traded in securities has been in possession of unpublished price sensitive information,  his trade would be presumed to have been motivated by the knowledge and awareness of such information in his possession.

The requirement to maintain structured digital database under Regulation 3(5), containing the names of such persons or entities with whom  UPSI  is shared,  is applicable to listed companies, and intermediaries and fiduciaries who handle UPSI of a listed company in the course of business operations.

The Structured Digital Database shall be maintained with adequate internal control and checks such as time stamping and audit trails to ensure non-tampering of the database.

The  listed company should maintain structured digital database internally, which  shall contain information including the following:

1. Details of the Unpublished Price Sensitive Information (UPSI)
2. Capture  the nature of UPSI shared
3. Details of persons with whom such UPSI is shared (along with their PANs/other unique identifier) and details of persons who have shared the information.
   

Companies are required  to  maintain  this  structured  digital  database  even  when  the  information is shared only within the company