Insiders, Connected Persons, and Designated Persons: Demystifying the Quandary of ‘Insider’ Trading Terms

– Sikha Bansal, Partner, Vinod Kothari & Company (sikha@vinodkothari.com)

Securities law in India, as in most other countries in the world, prohibits ‘insider trading’ and seeks to impose
stiff penalties including custodial sentence to ‘insiders’ who violate insider trading norms – relevant provisions
are contained in section 12A and section 15G of the Securities and Exchange Board of India Act, 1992. The
SEBI (Prohibition of Insider Trading) Regulations, 2015 (‘Regulations’), which succeeded the erstwhile 1992
regulations, have been framed by SEBI to provide for a detailed framework for the same. It may be noted that,
while the Regulations broadly put a restriction on insider trading, the focus is on certain specific insiders –
specified to be ‘designated persons’ – whose trading in securities of the listed company is sought to be
“regulated, monitored and reported” in a certain manner and the ‘connected persons’.

The article has been published in August, 2021 edition of ICSI Chartered Secretary journal and can be read here, from Page 70 onwards.