SEBI's Insider Trading Rules Are Stricter Than You Think. Here's What Your Designated Persons Need to Know

It's January. Your compliance team is resetting trading windows, updating designated persons lists, and filing the mandatory quarterly disclosures. For many listed companies, this is when SEBI's Prohibition of Insider Trading (PIT) Regulations 2015 feel like background noise, a box to tick.

But the regulations are far more specific, and far more strict, than most compliance officers realize. And the gap between what companies think they're doing and what SEBI actually requires is where enforcement actions find their footing.

What do SEBI's insider trading rules actually say?

Regulation 4 bars any insider from trading in listed securities while in possession of UPSI, and an insider is anyone who is a connected person or who has, or can access, UPSI.

The SEBI PIT Regulations 2015 (as amended) start with a simple definition but spiral into complexity: insider trading means trading in securities while in possession of unpublished price-sensitive information (UPSI).

That's straightforward. Where it gets complex, and where companies routinely underestimate their obligations, is in the definition of who is an "insider" and what counts as "connected persons."

A designated person isn't just the CEO, CFO, or company secretary. The board, in consultation with the compliance officer, must designate people on the basis of their role, function and access to UPSI (Regulation 9(4)), and Regulation 9A requires every employee with access to UPSI to be identified as a designated person. The people who typically have access include:

• Board members and statutory auditors
• Finance team members (not just treasury, anyone who handles financial data)
• M&A advisors and deal teams during corporate transactions
• HR personnel who handle sensitive organizational changes before announcement
• IT staff with access to confidential systems
• Anyone in a defined role with access to material information

Connected persons, and this is critical, include the immediate family, household members, and anyone else who has access to information through the designated person. A spouse, adult child, parent, or sibling trading on information overheard at home is also committing insider trading. That liability doesn't stop with the designated person.

Is the trading window enough to prevent insider trading?

No. The window only restricts when designated persons and their immediate relatives can trade; trading while in possession of UPSI is prohibited whenever it happens.

Many companies treat the trading window as the only enforcement point. It's not. The regulations require:

Trading windows are control mechanisms, not compliance substitutes. They restrict when trading can happen, but they don't define the scope of what is insider trading.

A designated person who trades during an open window while in possession of UPSI is still committing insider trading. The window closing doesn't give permission to trade on unpublished information, it just prevents trading entirely during high-risk periods (pre-results, during board meetings, during corporate announcements).

What must insider trading training cover?

At a minimum: what UPSI is, who counts as a designated or connected person, how the trading window works, pre-clearance and trading plans, disclosure deadlines, how to report a leak, and the penalties.

Here's where most programs fall short. SEBI PIT Regulations don't specify training content, but enforcement records show what regulators expect designated persons and connected persons to understand:

Annual refresher training should cover regulatory updates, case studies from SEBI enforcement, and scenario-based discussions specific to your business (results disclosure timelines, M&A cycles, key announcements in your sector).

What disclosures must directors, promoters and designated persons make?

New directors, key managerial personnel and promoters must disclose their holdings within seven days, and directors, promoters and designated persons must disclose trades above ₹10 lakh in a calendar quarter within two trading days.

Under Regulation 7(1)(b), every person appointed as a key managerial personnel or director, or who becomes a promoter or member of the promoter group, must disclose their holding of the company's securities within seven days. This isn't optional. And the scope is broader than most companies explain: disclosures include trading in derivatives (Regulation 6(3)) and trades by immediate relatives and anyone else for whom the person takes trading decisions (Regulation 6(2)). Designated persons must also give the company the names and PAN of their immediate relatives and of people with whom they share a material financial relationship, every year and whenever this changes (Schedule B).

After that, every promoter, member of the promoter group, designated person and director must disclose to the company any trades within two trading days, once the value traded in a calendar quarter exceeds ₹10 lakh (Regulation 7(2)(a)). The company then has two trading days to notify the stock exchange (Regulation 7(2)(b)). Miss that window, and the company is already non-compliant.

Why does this matter during results season?

Q1 2026 results cycles are ramping up. Board meetings are being scheduled. Corporate announcements are in preparation. This is when information asymmetry is highest and when SEBI enforcement focus typically intensifies.

Companies that assume their training program covers the basics because it mentions "don't trade on unpublished information" are setting themselves and their employees up for enforcement risk.

Your compliance officer needs to know: SEBI doesn't enforce what you intended. They enforce what the regulations say. And the regulations are stricter than most training programs acknowledge.

How do you audit your insider trading compliance programme?

January is the right time to audit your PIT compliance program:

• Does your training cover connected persons explicitly?
• Do your designated persons understand the difference between "access to information" and "trading during a window"?
• Are your upfront disclosure and transaction reporting timelines documented and enforced?
• Do you have a process for tracking and training new designated persons?
• Has your training been updated in the past 12 months?

If any answer is "no" or "not sure," your compliance program has gaps that enforcement will find. Our Insider Trading Prevention course covers each of these points, and the insider trading training hub sets out options for designated persons and wider teams.