Insider trading law does not punish intent — it punishes process failures. An unclosed trading window, a missing SDD entry, a designated person who traded without pre-clearance: each is a violation on its own, whether or not anyone profited. We run the full PIT apparatus for listed companies so the process never fails.
The SEBI (Prohibition of Insider Trading) Regulations, 2015 — PIT — apply to every listed company and to anyone connected with it. The core idea is simple: unpublished price sensitive information (UPSI) must not be traded on, and the company must run systems that make that practically true. The regulations demand a code of conduct (Reg 9), a code of fair disclosure (Reg 8), continual disclosures (Reg 7), and a structured digital database recording who had UPSI and when.
What catches companies is not deliberate wrongdoing — it is administration. Trading windows left open during results season. Pre-clearance requests answered late, so the insider trades without one. SDD entries made weeks after the UPSI was shared. SEBI's enforcement in recent years has focused exactly on these process failures, with penalties running into crores.
Our PIT practice runs the machinery: designated person lists, trading window calendars, pre-clearance workflows, SDD maintenance, and the board-level reporting the regulations expect. Your compliance officer gets a system; your directors get peace of mind.
Every listed company needs a PIT framework — Reg 9 makes the code of conduct mandatory, and the SDD is non-negotiable. But the companies that hire us are usually the ones where the framework exists on paper and leaks in practice: the pre-clearance email nobody answered, the window that reopened a day early, the SDD with gaps.
Promoter-driven companies and companies with large designated-person populations (senior management, auditors, consultants with UPSI access) feel the load most. If your compliance officer is also your company secretary, CFO, or legal head wearing a second hat, the process deserves dedicated attention.
Setting up a PIT framework from scratch takes three to six weeks: codes drafted and board-approved, designated persons identified and mapped, SDD implemented, window calendar built. If a framework already exists, the first month is a gap audit — we find the leaks before SEBI does.
Ongoing management is a monthly retainer scaled to the number of designated persons and the frequency of UPSI events (results, deals, fundraisers). For most mid-size listed companies it is a fraction of one penalty — and SEBI's PIT penalties in recent years have routinely run into crores.
Directors, key managerial personnel and senior management designated by the board, plus any employee or connected person with access to UPSI. The company decides the list — and it must stay current, reviewed at least quarterly as people join, leave and change roles.
Any information about the company that is not generally available and would materially move the share price: results, dividends, mergers, fundraisers, major contracts, management changes. If you have to ask whether something is UPSI, treat it as UPSI until the compliance officer says otherwise.
At minimum, from the end of every quarter until 48 hours after results are declared. It is also closed whenever UPSI exists — during deals, fundraisers, or any price-sensitive development. The window reopens only after the information is generally available, which means after exchange disclosure, not after the board meeting.
The window stays closed until 48 hours after the results become generally available — that is, 48 hours after the exchange filing, not 48 hours after the board approves them. Reopening on the meeting date is one of the most common violations found in compliance audits.
Designated persons must get the compliance officer’s approval before trading in the company’s securities when the window is open. Requests are logged, decided within a committed turnaround, and approvals documented. Trading without pre-clearance — even in an open window — is a violation.
The regulations do not fix a single pre-clearance threshold — each company’s code of conduct sets its own. ₹10 lakh is the Reg 7 continual-disclosure trigger (traded value per calendar quarter, disclosed within 2 trading days). Most codes align pre-clearance with or below that level; check your company’s code for the exact figure.
Buying then selling — or selling then buying — the company’s securities within 6 months by a designated person. It is prohibited regardless of intent. If it happens inadvertently, it must be reported to the compliance officer and any profit disgorged to SEBI’s investor protection fund.
Yes. The code of conduct covers designated persons and their immediate relatives — the window closure binds both. A trade by a spouse or dependent child during a closed window is treated the same as a trade by the designated person. Families need the same briefing the designated person gets.
A digital record of every person with whom UPSI was shared, the nature of the UPSI, and the date and time of sharing — maintained with access controls and an audit trail. SEBI examines it first in every insider trading probe, and gaps in it are treated as standalone violations.
Eight years. The SDD must be preserved with its access controls and audit trail intact for the full period — SEBI can call for historical entries during any investigation. Reconstruction after the fact does not count; entries must be contemporaneous.
No. An Excel file cannot meet the regulatory standard — the SDD needs access controls, user-level audit trails and tamper-evident timestamps. SEBI expects a proper database system. A spreadsheet shared on email is the fastest way to fail an inspection.
Creation and invocation of pledge for bona fide commercial transactions is not treated as ‘trading’ under PIT — but disclosure obligations still apply. If the pledged or invoked shares cross the ₹10 lakh quarterly threshold, Reg 7 disclosure is due within 2 trading days, and SAST pledge disclosures apply separately.
Under Section 15G, penalties can reach ₹25 crore or three times the profit made, whichever is higher — plus disgorgement of unlawful gains and possible debarment from the securities market. Serious cases face criminal prosecution. Even pure process failures, like SDD gaps, draw heavy penalties without any proven gain.
Yes — a trading plan is the one structured exception. It must be filed when no UPSI is held and the window is open, commit to trades over at least 12 months, and be approved and made public. Trades executed under an approved plan can proceed even during closed windows.
Two categories: connected persons (directors, officers, employees, and those with a professional or business connection), and anyone in possession of or with access to UPSI. Auditors, bankers, lawyers and consultants on a live deal are all insiders for the period they hold the information.
Talk to a partner about your situation — no pitch, no obligation. If we're not the right firm for it, we'll tell you that too.
Request a consultation