The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015 (PIT Regulations), restrict “insiders” from dealing in listed (or to-be-listed) securities when in possession of unpublished price sensitive information (UPSI). Any trading by insiders when in possession of UPSI is deemed to be motivated by their knowledge of UPSI.
The PIT Regulations require listed companies to adopt a code of conduct (CoC), in compliance with prescribed standards, in order to regulate, monitor and report trading by their employees and other connected persons associated with the company (designated persons). The CoC mandates listed companies to operate a notional trading window for monitoring trading by designated persons and also calls for closure of the trading window during periods when designated persons can be reasonably expected to possess UPSI.
SEBI’s position on dealing in securities while the trading window is closed in accordance with a company’s CoC has been clarified through various informal guidance notes.
Puja Sondhi is a partner, Aayush Kapoor is a principal associate and Aakanksha Dalal is an associate at Shardul Amarchand Mangaldas. The views and opinions expressed in this article are solely those of the authors and do not necessarily reflect the official view or position of the firm.
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