SEBI has amended the SEBI (Prohibition of Insider Trading) Regulations, 2015 (‘PIT Regulations’) with effect from July 25, 2019. The key changes are as follows:

i.       An amendment has been made to the minimum standards for the Code of Conduct for Listed Companies to Regulate, Monitor and Report Trading by Designated Persons (‘Code’), which clarifies that trading window restrictions under the Code will not apply to transactions for which the: (i) defences to trading (when in possession of unpublished price sensitive information) under Regulation 4(1) of the PIT Regulations are available (except the Chinese walls defence); and (ii) pledge of shares for a bona fide purpose (such as raising of funds), subject to obtaining pre-clearance from the compliance officer and compliance with applicable SEBI regulations.

Further, trading window restrictions will not apply to transactions undertaken in accordance with various SEBI regulations, such as in case of acquisition by conversion of warrants or debentures, subscribing to rights issue, further public issue, preferential allotment or tendering of shares in a buy-back offer, open offer or delisting offer.

ii.      With respect to disclosures to be made under the Code by designated persons regarding persons with whom they share a ‘material financial relationship’, SEBI has clarified that a ‘material financial relationship’ means a relationship in which the relevant person has received any payment (such as a loan or gift) from a designated person during the immediately preceding 12 months, equivalent to at least 25% of the annual income of such designated person (and not the payer’s annual income, as was previously prescribed).