Board Meeting of Trust Bank was to take place at 2.00 p.m. on 23 rd October, 2017 to take on record the results for the quarter ending 30 th September, 2017. There was sharp movement in stock price of Trust Bank from 11

CS Professional · Capital Commodity and Money Market · PYQS · June 2018
Board Meeting of Trust Bank was to take place at 2.00 p.m. on 23 rd October, 2017 to take on record the results for the quarter ending 30 th September, 2017. There was sharp movement in stock price of Trust Bank from 11 a.m. onwards on 23 rd October 2017. The matter came to the notice of NSE (National Stock Exchange). On enquiry, it was noted that son of an Independent Director who was in possession of agenda of the Board Meeting, flashed the results on whatsapp group. Hence the people in that particular whatsapp group were in possession of results before the Board Meeting. In this scenario offer your comments : (i) Who are the people against whom the SEBI can take an action under SEBI (Prohibition of Insider Trading) regulations, 2015? (ii) Steps to be taken by Managing Director to avoid such type of violation in future. (iii) Prepare a note as a Company Secretary for the management on this matter and also suggestons to the management so that such type of violation does not take place in future.

Answer & Explanation:

Answer 2(c)(i) SEBI can take action against the company, CEO, Company Secretary, Independent Directors, also against the Son of the Independent Director. CEO and Company Secretary failed to keep the confidentiality. Independent Director should have kept the agenda under Lock and Key and it was his basic responsibility to maintain the confidentiality. Son of Independent Director is not supposed to go through the Agenda Papers and on Top of it, circulation of results on WhatsApp Group is certainly not desirable. Answer 2(c)(ii) It is the Managing Director who gets the result and can make changes based on the understanding of the company. He could have taken decision to keep the results with him only and could have placed in the meeting instead of circulation. Answer 2(c)(iii) The Company Secretary should not have circulated the results along with the Agenda. Normally, in these circumstances, results are given to the Board only at time of discussion of the popular items in the Board Meeting.

Topics: Corporate Governance

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