Carnation Industries Limited

Code On Insider Trading

1.0

INTRODUCTION

Trading in a listed Company’s securities by insiders who enjoy a special status on account of access to price sensitive information and as a result thereof, are able to use their special status for individual benefit, at the expense of the general investor at large is referred to as Insider Trading.

In view of the substantial changes in the securities trading environment, and possible avenues for communication of price sensitive information, which provides an opportunity for insiders to gain an advantage therefrom as compared to the general investor at large, SEBI has recently notified the SEBI (Prohibition of Insider Trading) Regulations, 2002 (hereinafter referred to as the ‘Regulations’) to put a curb on this malpractice.

These Regulations contain a comprehensive code for regulation, disclosures and approvals within a company, for Directors, Managers, Company Secretary, Auditors and ‘Designated Employees’, which needs to be followed if these categories of personnel acquire, hold, purchase sell or otherwise deal in the Company’s securities. The Regulations also require the Company to frame and implement a Code of Conduct for prevention of Insider Trading.

The enclosed Code has been approved by the Board of the Company at its meeting held on Monday, 21^st August,2006 and it should be warranted that all employees should abide by the provisions of the same. The Part ‘A’ of the Code is applicable to all employees whereas the contents of parts ‘C’ and ‘D’ are applicable to Directors, Officers and Designated Employees’ (as referred to in Clause 2 of this Code).

2.0

OBJECTIVE AND SCOPE OF THE CODE

The Code on Insider Trading has been formulated to comply with the various requirements as laid down under the SEBI Regulations on Insider Trading and going further, this code shall govern all acquisitions, purchases, sale and otherwise trading by the directors/designated employees in the Securities of Carnation Industries Limited (CIL). Adherence to the Code is mandatory for all employees. However, more detailed disclosures and approvals as contained in parts ‘C’ and ‘D’ are required from the Directors, Officers and Designated Employees.

In particular, these categories are as under:

Officers

Directors (both executive and non executive) of the Company and any other persons in accordance with whose directions, the Board of Directors or any one or more of the Directors are accustomed to act;

Company Secretary
Auditors

Designated Employees

	All employees, irrespective of the level, employed in the Accounts, Finance, Internal Audit, Legal and Secretarial Departments, as well as Executive Directors including Chairman, Managing Director or any other person holding the office of the Chief Executive/Operating officer, by whatever name designated.
	Employees of other Departments, on a case to case basis, who would be reasonably expected to have access to unpublished price sensitive information relating to the Company, as to be decided by the Compliance Officer, on a case to case basis.
	Employees (not covered under the above categories) but holding 5% or more of the Voting rights or the paid up capital in the company.

3.0

DEFINITIONS

S.No

Term

Reference

(i)

‘Compliance Officer’

Company Secretary of CIL.

(ii)

‘Dependent Family members’

The Spouse, non-working children below the age of 21 years (in the case of Directors, Officers and Designated Employees referred to in clause 2 of this Code.)

(iii)

‘Price Sensitive Information’

Any information which relates directly or indirectly to the Company and which if published, is likely to materially affect the price of securities of the Company. The following shall be deemed to be price sensitive information:

a)	Periodical financial results of the Company;
b)	Intended declaration of dividends (both interim and final);
c)	Issue of securities or buy back of securities;
d)	Any major expansion plans or execution of new projects;
e)	Amalgamation, mergers or take-overs;
f)	Disposal of whole or substantial part of the Undertaking;
g)	Any significant changes in policies, plans or operations of the Company
h)	Any other information which, considering its materiality and bearing on the Company’s operations / performance, may be considered ‘price sensitive’.

(iv)

‘Securities’

The Company’s shares, debentures, bonds, derivatives or like instruments that are traded on any Stock Exchange.

Terms that have not been defined in this Code shall have the same meaning assigned to them in the Companies Act, 1956 and / or any other SEBI Regulation.

PART ‘A’

CONFIDENTIALITY OF PRICE SENSITIVE INFORMATION

(Applicable to all Directors and employees, whether Officers or Designated Employees as referred to Clause 2 of this Code or otherwise)

4.0

CONFIDENTIALITY OF PRICE SENSITIVE INFORMATION

Price Sensitive Information is to be handled on a "need to know" basis, i.e., Price Sensitive Information should be disclosed only to those within the company who need the information to discharge their duty.

It is therefore imperative that all Directors, Officers or Designated Employees as referred to in Clause 2 of this Code, are required to maintain confidentiality of price sensitive information and should adhere to the following:

(1)	Not to acquire/purchase/sell or otherwise deal in the Company’s securities, whether by themselves or on behalf of others, while in possession of unpublished price sensitive information.
(2)	Not to pass on/share such information to any person directly or indirectly by way of making a recommendation for the purchase or sale of securities.
(3)	Ensure that access to the price sensitive information is restricted and safeguarded .

PART ‘B’

DUTIES OF THE COMPLIANCE OFFICER

5.0

DUTIES OF THE COMPLIANCE OFFICER

The Compliance Officer of the Company shall be responsible for establishing policies, procedures and monitoring adherence to the Code under the overall supervision of the Board. Without limiting to the aforesaid, the Compliance Officer shall be responsible for the following:

(1)	Pre-clearance of trades of Directors, Officers and Designated Employees (as per Clause 7.2 of this Code).
(2)	Clarifications and modifications as regards policies and procedures with respects to this Code and to ensure effective implementation of this Code.
(3)	Maintenance of records of all Directors, Officers and Designated Employees as required under the Code and any changes therein and to periodically report the same to the Board.
(4)	Establishment of mechanisms and procedures necessary for monitoring of transactions and implementation of the Code.
(5)	Waiver of the requirement of holding period of 30 days (as per Clause 7.2 of the Code), in case of personal emergencies, on an application made for waiver.
(6)	Initiation of any disciplinary action in consultation with the PDC Department, of any punitive measures e.g., suspension from service, wage freeze etc for any non-adherence to this Code and also informing SEBI of the same.

PART ‘C’

DISCLOSURE OF HOLDINGS IN SECURITIES
(Applicable only to Directors, Officers and Designated Employees)

The following disclosures shall be made to the Compliance Officer:

6.1

INITIAL DISCLOSURES

By whom	Disclosure requirement	Time period
Directors, Officers and Designated Employees.	Number of Securities or voting rights held by them & their dependent family members.	Within 4 working days of appointment / transfer / intimation by the Company.

The disclosure under this clause should be made as per proforma given in Annexure 2.

6.2

CONTINUAL DISCLOSURES

By whom

Disclosure requirement

Time period

Directors, Officers and Designated Employees.

(1)	Number of Securities or voting rights held and.
(2)	Change in holdings or voting rights, only if each acquisition or sale exceeds Rs. 5 lacs in market value or 5,000 shares or 2% of the capital or voting rights of the Company, whichever is lower, since the date of last disclosure under this clause or clause 6.1.

Within 4 working days of:

(1)	Receipt of intimation of allotment of securities, or;
(2)	Acquisition/purchase of securities or voting rights, or;
(3)	Sale of securities or voting rights.

The disclosure under this clause should be made as per proforma given in Annexure 3.

The intimation received by the Compliance Officer under Clause 6.1 and 6.2 shall be intimated to all the Stock Exchanges where the securities of the Company are listed, within 5 days of receipt of the same.

6.3

PERIODIC DISCLOSURES

By whom	Disclosure requirement	Time period
Directors, Officers and Designated Employees.	Details of securities transacted by them & their dependent family members.	Half-yearly, within 30 days of the half year ended 31st March and 30th September respectively.

The disclosure under this clause should be made as per proforma given in Annexure 4.

6.4

ANNUAL DISCLOSURES

By whom	Disclosure requirement	Time period
Directors, Officers and Designated Employees.	Annual Statement of all securities held by them & their dependent family members.	Within 30 days of the end of 31^st March every year.

The disclosure under this clause should be made as per proforma given in Annexure 5.

PART ‘D’

TRADING RESTRICTIONS
(Applicable to Directors, Officers and Designated Employees)

All directors/ officers and designated employees of the company shall be subjected to trading restrictions as enumerated hereunder. The company shall specify a trading period, to be called "Trading Window", for trading in the company’s securities.

7.1

TRADING WINDOW AND NON -TRADING WINDOW

(1)	The Directors, Officers and Designated Employees can acquire / purchase / sell or otherwise deal in the securities of CIL only during a valid ‘Trading Window’ and shall not deal in the Company’s securities during the ‘Non-Trading Window’.
(2)	The Non-trading Window will commence 7 days before and conclude 2 days after each Board Meeting.
(4)	If the acquisition, purchase, sale of securities exceeds the limits provided in Clause 7.2 below, pre-clearance of the transaction will be required by the Director / Officer or Designated Employee desirous of dealing in the Company’s securities.

7.2

PRE-CLEARANCE OF TRADES

Directors, Officers and Designated Employees are required to follow the pre-clearance of the proposed acquisition / purchase / sale transactions by themselves or through their dependent family members as per the procedure described hereunder if the said transaction of the securities of CIL is in excess of 1000 in number or Rupees One lac in market value, whichever is lower, in a single transaction.

In such cases, an application has to be made to the Compliance Officer in the format as provided in Annexure 6.

The Compliance Officer will scrutinize the application within 3 working days of submission and communicate the approval/ refusal (alongwith reasons therefore) to the applicant. The decision of the Compliance Officer in this regard will be final. In the absence of the Compliance Officer, the pre-clearance application will be decided upon by the Managing Director.

The pre-clearance approval shall be valid only for one week from the date of communication and shall lapse thereafter. If the transaction is not consummated within one week from the approval date, the employee/ director will be required to follow the process of pre clearance again.

All Securities acquired by the Directors/ designated employees must be held for a minimum period of 30 days. However, in circumstances of personal emergency, an application may be made to the Compliance Officer requesting for a waiver of the holding period, explaining reasons for the same. The Compliance Officer, on being satisfied of the reasons may grant a waiver from this condition.

EXCLUSIONS

The requirements of pre- clearance of a proposed transaction shall not apply in the following cases:

1.	In the event of participation of a public event i.e a rights or a bonus issue.
2.	In the case of any acquisition of shares through transmission or inheritance, or like mode
3.	By way of any court settlement or award thereof.

PART ‘E’

MISCELLANEOUS

8.0

DELEGATION

The Compliance Officer may delegate the powers and the functions conferred upon him / her by this Code to one or more employees of CIL during his / her temporary absence from the Company.

9.0

PENALTY FOR NON –ADHERENCE TO THE CODE

Any Director / Designated Employee who indulges in any transaction in the shares of the Company or communicates any information or counsels any person trading in shares, in contravention of the Code of Conduct may be penalized and appropriate action may be taken by the Company against such errant.

If any non-adherence is observed, the Compliance Officer shall cause an internal enquiry to be conducted and on the establishment of non-adherence, take actions including but not limited to :

	Suspension of the employee from service.
	Wage freeze.
	Disqualification of the employee from any of the Employee Stock Option Plan(s) .
	Disqualification from Board membership.
	Such other suitable action as may be deemed appropriate by the Compliance officer.

In addition, non-adherence to the Code shall also be reported by the Compliance Officer to SEBI which may also initiate its own punitive proceedings against the said director/employee.

Top

ANNEXURE 2

Dated :

The Compliance Officer
Carnation Industries Limited
222, A.J.C.Bose Road, 1^st floor,
KOLKATA – 700 017.

Re : Disclosure of Interest / Shareholding in terms of SEBI (Prohibition of Insider Trading) Regulations, 2002.

Dear Sir / Madam,

I ____________________________ S/D/W/o ________________________ , being a Director / Officer / Designated Employee of Carnation Industries Limited do hereby confirm that the following Equity Shares / Voting Rights / Securities (give description of security) of the Company are held by me/ my dependent family members as on ________:

Folio No. / DP & Client ID No.

Name of the holder

No. of Shares / Voting Rights / Securities held

Yours Faithfully

Name
Designation
Deptt. / Unit
Signature