SEBI, by way of a Notification dated December 4, 2024, has amended the scope of ‘relatives’ and ‘connected persons’ under the SEBI (Prohibition of Insider Trading) Regulations, 2015 (‘Insider Trading Regulations’), with effect from December 6, 2024. Under the Insider Trading Regulations, the term ‘connected persons’ is used to describe persons who are considered as ‘insiders’ and presumed to have an access to unpublished price sensitive information (‘UPSI’). The onus of establishing that such person is not in possession of UPSI is on the connected person.

Key amendments are set out below:

i.   Prior to the amendment, ‘immediate relatives’ i.e., a spouse of a person, and parent, sibling, and child of such person or of the spouse, any of whom is either dependent financially on such person or consults such person in taking decisions relating to trading in securities, were presumed to be a ‘connected person’. Pursuant to the amendment, the ambit of ‘connected persons’ has been expanded to ‘relatives’ and not just immediate relatives, where ‘relatives’ means: (a) spouse of the person; (b) parent of the person and parent of its spouse; (c) sibling of the person and sibling of its spouse, and their respective spouses; and (d) child of the person and child of its spouse, and their respective spouses.

ii.   In addition, the term ‘connected persons’ now also includes: (a) a firm or its partner or its employee in which a person is also a partner; (b) a person sharing household or residence with a person; and (c) a concern, firm, trust, Hindu undivided family, company or association of persons where relative of a director of the company (as opposed to immediate relative, prior to the amendment), has more than 10% holding or interest. Further, relatives of connected persons are also to be treated as ‘connected persons’.