Difference between Insiders, Designated Person and Connected Person as per SEBI (Prohibition of Insider Trading) Regulations, 2015
SEBI, through its SEBI (Prohibition of Insider Trading) (Third Amendment) Regulations, 2024 dated December 4, 2024, has made minor changes to the definitions of ‘connected person,’ ‘immediate relative,’ and ‘insider.’ Additionally, the term ‘immediate relative’ in the definition of ‘deemed connected person’ has been replaced with ‘relative,’ and a specific definition of ‘relative’ has been added. This change broadens the definition of “deemed connected persons” to include a wider range of individuals and entities likely to have access to unpublished price-sensitive information (UPSI).
To better understand the impact of these amendments, I have prepared an analysis distinguishing the roles of an Insider, Designated Person, and Connected Person.
Aspect | Insider | Designated Persons (DPs) | Connected Persons (CPs) |
Definition | Any person who is in possession of or has access to unpublished price-sensitive information (UPSI). This includes both DPs and CPs, as well as any other individual who has access to UPSI.
(For the precise legal definition refer Reg. 2(1)(g) of PIT Regulations) |
On the basis of role and function in the organisation certain individuals are designated by the Company as to have access to UPSI. These DPs are generally Promoters, CEO, employees upto two levels below CEO, any support staff of listed company, intermediary or fiduciary such as IT staff or secretarial staff who have access to UPSI and such other persons as defined by the company’s internal policy.
(For the precise legal definition refer Reg. 9(4) of PIT Regulations) |
Any person who is or has been associated with the company directly or indirectly, in any capacity, during the six months prior to the act of insider trading. This includes relatives, professional or business associates, etc. (𝘍𝘰𝘳 𝘵𝘩𝘦 𝘱𝘳𝘦𝘤𝘪𝘴𝘦 𝘭𝘦𝘨𝘢𝘭 𝘥𝘦𝘧𝘪𝘯𝘪𝘵𝘪𝘰𝘯, refer Reg. 2(1)(d) of PIT Regulations) |
Obligations |
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Onus | The onus is on the person levelling the charge to demonstrate that the individual possessed UPSI while executing the trade. | Onus is on DP to prove that trade was not motivated on account of UPSI. | The onus is on the CP to prove that they are not connected if accused of insider trading. |
Company Obligations |
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Restrictions | General prohibition on trading while in possession of UPSI. |
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General prohibition on trading while in possession of UPSI. |
Disclosures | No specific mandatory disclosures unless defined as a DP or CP.
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No mandatory initial or continual disclosures. However, the PIT Regulations provides companies with the discretion to mandate disclosures from CP or a class of CP who are not otherwise covered by the mandatory initial and continual disclosure requirements under regulations 7(1) and 7(2). |
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Prepared by: CS Ruchi Bohra | Deputy Manager | Century Plyboards (India) Limited
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