Insider Trading Rules SEBI: UPSI, Trading Windows and Disclosures Explained

Every results season, the same kind of filing turns up on the exchanges: a company telling shareholders that its “trading window” is closed until 48 hours after the board meeting. Most retail investors scroll past it. They shouldn’t. That one line is the visible edge of India’s insider trading rules, and SEBI‘s framework for them reaches a lot further than company directors. If someone hands you a tip that isn’t public yet, the rules can apply to you too.

This guide walks through the SEBI (Prohibition of Insider Trading) Regulations, 2015, usually called the PIT Regulations, in plain language: who counts as an insider, what “UPSI” means, how the trading window works, what insiders have to disclose and when, and the narrow routes through which insiders can still trade legally. Everything below is drawn from SEBI’s consolidated text of the PIT Regulations, SEBI’s FAQs on the regulations and a SEBI circular of April 21, 2025. The worked examples use made-up names, dates and amounts.

Insider trading rules SEBI applies: the two core bans

Strip the regulations down and you find two prohibitions.

The first is on communication. Under Regulation 3, no insider may communicate, provide or allow access to unpublished price sensitive information about a listed company (or one proposed to be listed) to anyone, including other insiders, unless it is for legitimate purposes, the performance of duties or a legal obligation. The same regulation also stops anyone from procuring that information from an insider, or getting an insider to share it, except on those same grounds. SEBI’s own note to the rule says it is meant to make organisations handle such information strictly on a need-to-know basis.

The second is on trading. Regulation 4(1) says no insider shall trade in securities that are listed or proposed to be listed when in possession of UPSI. The explanation attached to it is blunt: if a person traded while holding UPSI, the trades are presumed to have been motivated by that information. The insider then has to prove innocence using specific circumstances the regulation lists, which we cover further down.

“Trading” itself is defined widely. It includes subscribing, buying, selling and dealing, and SEBI’s FAQs confirm that it covers both on-market and off-market deals, so a private off-market transfer is still trading for these rules.

Who is an insider? Wider than you think

Regulation 2(1)(g) defines an insider as anyone who is either a connected person or in possession of or having access to UPSI. That second limb is the part retail investors tend to miss.

A connected person is someone who is, or has been during the six months before the act in question, associated with the company in any capacity that gives them access to UPSI, or could reasonably be expected to. The definition names frequent communication with officers, contractual, fiduciary or employment relationships, directorships and professional or business relationships, temporary or permanent. Then it adds a list of categories that are deemed connected unless they prove otherwise.

The second limb doesn’t care how you got the information. SEBI’s note to the definition says anyone in possession of or with access to UPSI should be considered an insider regardless of the manner in which they came into possession of it. The FAQs make the same point directly: even a person who is not a “designated person” at the company is barred from trading on UPSI.

The rules don’t ask whether you work at the company. They ask whether you knew something the market didn’t when you placed the order.

So picture a friend who works in a listed company’s finance team telling you over dinner that the quarter’s numbers are much better than expected. If you buy the stock the next morning, before the results are out, you are trading while in possession of UPSI. Your friend has a problem under Regulation 3, and you have one under Regulation 4.

What counts as UPSI

Unpublished price sensitive information is any information about a company or its securities, directly or indirectly, that is not generally available and that would likely materially affect the price once it does become available. The regulation gives a non-exhaustive list. It ordinarily includes, among other items:

• financial results;
• dividends;
• changes in capital structure;
• mergers, demergers, acquisitions, delistings, disposals and business expansion, plus the award or termination of orders or contracts outside the normal course of business;
• changes in key managerial personnel (other than due to superannuation or end of term), and the resignation of a statutory or secretarial auditor;
• a change in credit ratings, other than ESG ratings;
• proposed fund raising;
• fraud or defaults by the company, its promoter, directors, key managerial personnel or subsidiary, or the arrest of KMP, a promoter or a director;
• resolution plans, restructuring or one-time settlements on bank loans, and insolvency events such as admission of a petition under the Insolvency and Bankruptcy Code;
• the start of a forensic audit and receipt of its final report;
• actions initiated or orders passed by a regulatory, statutory, enforcement or judicial body against the company or its directors.

Several of these items, including contract awards and auditor resignations, were added through an amendment effective June 10, 2025, according to the footnotes in SEBI’s consolidated text.

The flip side is “generally available information”, which the regulations define as information accessible to the public on a non-discriminatory basis. One detail matters a lot for anyone who trades on headlines: the definition specifically excludes unverified events or information reported in print or electronic media. A rumour on a TV ticker doesn’t make the underlying fact public. SEBI’s note adds that information published on a stock exchange website would ordinarily be considered generally available, which is one more reason to check the exchange filing rather than the WhatsApp forward. Our guide on how to find stocks in the news covers where those filings sit.

The trading window: why it shuts every quarter

Listed companies have to adopt a code of conduct based on the minimum standards in Schedule B of the regulations. The centrepiece is a notional trading window. Clause 4 says the window shall be closed when the compliance officer decides a designated person, or a class of them, can reasonably be expected to hold UPSI, and that designated persons and their immediate relatives shall not trade while it is closed.

For results, the timing is fixed. The trading restriction period “shall be made applicable from the end of every quarter till 48 hours after the declaration of financial results.” The word used to be “can”; an amendment effective July 25, 2019 made it “shall”. The same clause asks that the gap between the audit committee clearing the accounts and the board meeting be as narrow as possible, preferably the same day, to limit leaks. SEBI’s FAQs add that the window has to be closed for every piece of UPSI, not just results, and that a pre-clearance obtained while the window was open becomes invalid once it closes.

Here is how the dates play out for a made-up company with a September quarter.

Immediate relatives are covered too. The regulations define an immediate relative as a spouse, plus a parent, sibling or child of the person or the spouse, who is financially dependent on the person or consults them on trading decisions.

Enforcement is now partly automatic. SEBI’s master circular on surveillance already required exchanges and depositories to freeze the PAN of designated persons at the security level during the closure. A SEBI circular dated April 21, 2025 (copy hosted by ca2013.com) extended that PAN-ISIN freeze to immediate relatives of designated persons for results-related closures. It went live in two phases: from July 1, 2025 for the top 500 companies by BSE market capitalisation as of March 31, 2025, and from October 1, 2025 for all other listed companies and new listings.

Pre-clearance and the contra trade rule

An open window doesn’t mean a free hand. Under Schedule B, trades by designated persons above a threshold set by the company’s board need pre-clearance from the compliance officer, who can ask for a declaration that the applicant holds no UPSI. Once cleared, the trade has to be executed within the timeframe in the company’s code, which can’t exceed seven trading days. Miss it and you need fresh clearance.

Then there is the contra trade restriction. The code must set a period of at least six months during which a designated person who has traded cannot do the opposite trade. The compliance officer can relax this for recorded reasons, as long as the relaxation doesn’t breach the regulations. If a contra trade happens anyway, inadvertently or not, the profit is liable to be disgorged and sent to SEBI for credit to the Investor Protection and Education Fund. The regulations carve out trades pursuant to the exercise of stock options from this, and SEBI’s FAQs say the contra trade restriction applies to every trade, whether or not it crossed the pre-clearance threshold.

A quick illustration. Say a designated person buys 2,000 shares on January 10 under a company code that uses the six-month minimum. Selling any of those shares in the market before July 10 would be a contra trade. If they sold early at a profit, that profit would be at risk of disgorgement.

Disclosures: what insiders must report, and when

Regulation 7 sets out two kinds of disclosure.

Initial disclosure. Anyone appointed as a director or key managerial personnel, or who becomes a promoter or member of the promoter group, must disclose their holding in the company within seven days.

Continual disclosure. Every promoter, member of the promoter group, designated person and director must tell the company within two trading days of a trade if the value traded, in one transaction or a series over any calendar quarter, adds up to more than ₹10 lakh (or another value SEBI specifies). The company then has to notify the stock exchange within two trading days of receiving the disclosure or becoming aware of it. After one disclosure, the next one is triggered when the incremental trades since then cross the threshold again.

Worked through with hypothetical numbers, for a director in one calendar quarter:

The company then has two trading days to pass it on to the exchange. For investors, these filings are the useful part. They show what promoters and directors are actually doing with their own money, which is worth reading alongside the quarterly shareholding pattern and any promoter pledge disclosures.

The legal routes: when insiders can still trade

The presumption in Regulation 4 can be rebutted. The proviso lists circumstances an insider can use to demonstrate innocence, including:

• an off-market inter-se transfer between insiders who held the same UPSI, where both made a conscious and informed decision (such trades must be reported to the company within two working days, and the company tells the exchange within two trading days);
• a deal through the block deal window between persons holding the same UPSI, on the same conditions;
• a transaction carried out under a statutory or regulatory obligation;
• exercise of stock options where the exercise price was pre-determined under applicable rules;
• trades under a trading plan set up under Regulation 5.

SEBI’s note describes the trading plan as an option for people who may be perpetually in possession of UPSI, letting them trade in a compliant way. SEBI rewrote its terms in an amendment effective September 24, 2024. Under the current text, a plan:

• cannot start trading earlier than 120 calendar days after the plan is publicly disclosed (this replaced the earlier six months);
• cannot overlap with another plan already in force;
• must set out, for each trade, the value or number of shares, the nature of the trade, and either a specific date or a period of no more than five consecutive trading days;
• may optionally include a price limit: for a buy, an upper limit between the previous day’s close and up to 20% above it; for a sell, a lower limit between the close and up to 20% below it;
• cannot involve trading for market abuse.

The compliance officer has two trading days to approve or reject the plan and must notify an approved plan to the exchanges on the day of approval. Trades under an approved plan don’t need pre-clearance, and trading window norms don’t apply to them.

Take a hypothetical promoter whose plan is disclosed on November 1 and who wants to sell. Counting 120 calendar days (in a year without February 29), the first trade can’t happen before March 1. If the stock closed at ₹500 the day before the plan was submitted, any lower price limit for the sale would have to sit between ₹400 and ₹500.

A trading plan doesn’t buy immunity. It buys a long, public delay between deciding to trade and actually trading, so that whatever the insider knew has time to come out.

SEBI’s own note says exactly that: the 120-day cool-off is a statutory minimum and doesn’t protect an insider who held the same UPSI both when drawing up the plan and when it was executed.

The informant route and rewards

The regulations also run an informant mechanism. A person can file a Voluntary Information Disclosure Form with SEBI’s Office of Informant Protection, either directly or through a legal representative, about an insider trading violation that has happened, is happening or is about to happen. SEBI may, at its discretion, declare an informant eligible for a reward equal to 10% of the monetary sanctions, capped at ₹10 crore or a higher amount SEBI specifies. SEBI’s illustrative table in the regulation shows that a ₹20 crore sanction would mean a ₹2 crore reward, and sanctions of ₹100 crore or more hit the ₹10 crore cap.

What this means for ordinary investors

Most readers will never be a designated person. A few practical points still follow from the rules above.

• A tip from inside is a liability, not an edge. The insider definition covers anyone holding UPSI, however they got it.
• Media reports aren’t “public” for these rules. Unverified news is expressly excluded from generally available information. Wait for the exchange filing.
• Watch the disclosures. Promoter and director trades above ₹10 lakh a quarter have to reach the exchange quickly. A pattern of insider selling or buying is information you’re allowed to use, because it’s public.
• Read trading plans as signals. A disclosed plan tells you, months ahead, that a promoter intends to buy or sell a set quantity. That supply or demand is known in advance. Our guide to analysing quarterly results pairs well with this when you’re tracking a company through results season.

The insider trading rules SEBI enforces look technical on paper, but the idea underneath is simple. Price-moving facts should reach everyone at the same time, and the people closest to them carry the burden of showing they didn’t jump the queue.

Disclaimer: This article is for information and education only and is not investment advice or legal advice. The names, dates, share quantities, prices and amounts in the examples are hypothetical and used only to illustrate how the rules work. Regulations change; always check the latest text on the SEBI website, and consult a SEBI-registered investment adviser or a qualified legal professional before acting on any of this.