SEBI Insider Trading Compliance 2026: The ₹25 Crore SDD & Trading Window Guide for Listed and IPO-Bound Companies

SEBI Insider Trading Compliance 2026: The ₹25 Crore SDD & Trading Window Guide for Listed and IPO-Bound Companies

By CS Sapna Malpani, Practising Company Secretary, Bangalore · Last updated 22 June 2026

One signature on a wrong trade can cost a director ₹25 crore. That is the ceiling under Section 15G of the SEBI Act, and SEBI now reaches it through records most companies keep badly: the structured digital database and the trading window register. SEBI insider trading compliance in 2026 is no longer a one-page policy filed and forgotten. Two amendments that took full effect through 2025 widened what counts as price sensitive information and froze the trades of directors’ family members automatically. If you run a listed company, or you are heading towards an IPO, the gaps in your SDD and your trading window are the first thing an investigator pulls.

Why SEBI insider trading compliance matters more in 2026

Insider trading law in India does two things. It bans trading in a company’s securities while in possession of unpublished price sensitive information, and it makes the company prove, through records, that it controlled who held that information. The first is the offence everyone knows. The second is where most penalties actually land, because a company cannot show it behaved well without a database that survives scrutiny.

SEBI has asked for SDD extracts during investigations into well-known names, and a company that produces an incomplete or back-dated database moves from suspect to liable. The cost is not theoretical. Section 15G sets a floor of ₹10 lakh and a ceiling of ₹25 crore or three times the profit. Record and disclosure failures carry their own penalties on top. For a founder approaching an IPO, the bigger risk is timing: a secretarial audit finding on insider trading controls surfaces during due diligence, when there is no time left to fix the paper trail.

The penalty map: what each failure costs

Penalty amounts as per the SEBI Act, 1992. The adjudicating officer fixes the actual figure within these limits based on profit, repetition and disclosure conduct.

What changed: the 2024-25 amendments now in force

Two SEBI actions reshaped day-to-day compliance, and both are live for the financial year 2026-27 results season.

The UPSI list grew to 16 events. SEBI’s board approved the change on 18 December 2024 and notified it on 11 March 2025. The definition of UPSI was aligned with the material events in Schedule III, Part A of the LODR Regulations, taking the list to sixteen specific categories. These include financial results, dividends, fund raising, mergers and acquisitions, changes in key personnel, credit rating actions, fund-raising proposals and one-time settlements with banks. The practical effect is that more boardroom information is now price sensitive by default, so more conversations have to be logged in the SDD. For information that comes from outside the company, SEBI added a relaxation: the SDD entry can be made on a deferred basis within two calendar days.

The trading window now follows family members. Through circular SEBI/HO/ISD/ISD-PoD-2/P/CIR/2025/55 dated 21 April 2025, SEBI extended the automated freezing of trades during the results window to the immediate relatives of designated persons. The depositories and exchanges block the relevant accounts at source, so a spouse or dependent parent cannot place an order during a closed window even by mistake. The rollout was phased: the top 500 companies by market capitalisation from 1 July 2025, and all remaining listed companies from 1 October 2025. Companies feed the list of designated persons and their immediate relatives, with PAN, to the designated depository, and any change has to be passed on within two trading days.

What you must do now: a step-by-step compliance build

Whether you are already listed or twelve months from an offer document, the framework is the same set of building blocks. Here is the order that works.

Step 1. Adopt the two codes. The board approves a Code of Conduct to regulate, monitor and report trading by designated persons (Schedule B for listed companies, Schedule C for fiduciaries and intermediaries) and a Code of Fair Disclosure of UPSI under Regulation 8, read with Schedule A. The fair disclosure code goes on the company website and is filed with the stock exchanges.

Step 2. Appoint a compliance officer. A senior officer, usually the Company Secretary, is named compliance officer. This person reports to the board, administers both codes, maintains records and decides pre-clearance requests. For an IPO-bound company, this appointment should be in place well before the draft offer document is filed.

Step 3. Identify designated persons and their relatives. Build the list of designated persons: promoters and the promoter group, directors, KMP, and employees in finance, accounts, secretarial, legal and other UPSI-facing roles. Collect PAN for each, plus the names and PAN of their immediate relatives, because this is the data the depository needs for the trading window freeze.

Step 4. Build and run the structured digital database. Every time UPSI is shared, the SDD records the nature of the information, who shared it and who received it, all with PAN and a time stamp. Keep it internal. Regulation 3(5) bars outsourcing of the database, and the entries must be tamper-resistant. Information originating outside the company can be entered within two calendar days. Preserve everything for at least eight years, and longer if SEBI opens an inquiry.

Step 5. Operate the trading window and pre-clearance. Close the window from the end of each quarter until 48 hours after the financial results are public, and for any other period the compliance officer notifies. Designated persons must seek pre-clearance for trades above the threshold set in your code, and a contra-trade, the opposite transaction, is barred for six months. Confirm that your designated persons’ and relatives’ details with the depository are current, since the freeze now happens at the account level.

Step 6. File the continual disclosures. Under Regulation 7(2), every promoter, member of the promoter group, designated person and director must tell the company within two trading days of any trade where the value, alone or added up over a calendar quarter, crosses ₹10 lakh. These flow through SEBI’s system-driven disclosure mechanism, but the company stays responsible for accuracy.

The SDD entry process, start to finish

The deeper implication for boards and founders

According to CS Sapna Malpani, the shift in 2025 was from self-policing to system enforcement, and that changes where directors get caught. For years, the trading window depended on a designated person reading an email and choosing not to trade. Now the depository simply blocks the account, and the same logic is moving across other controls. The honest reading is that SEBI is building a record-first regime: the question in an inquiry is rarely whether someone meant to trade on inside information, but whether the company can produce a clean, time-stamped trail showing who knew what and when.

The prediction worth planning for is that the SDD will become a routine audit item rather than a document pulled out only during a crisis. Companies that treat it as a live register, updated the day UPSI moves, will clear due diligence and inquiries quickly. Those that reconstruct it after a notice arrives will keep failing, because a database assembled in hindsight is exactly what an investigator is trained to spot.

SDD, trading window and disclosure: how the three differ

Founders often merge these into one idea and then miss an obligation. They solve different problems. The structured digital database controls the flow of information, recording who held UPSI. The trading window controls timing, stopping trades while UPSI is unpublished. The Regulation 7(2) disclosure controls transparency, reporting trades that have already happened. A company can keep a perfect SDD and still be penalised for a late ₹12 lakh disclosure, or run the window correctly and still fail because the database is outsourced. If you are also tightening governance on the LODR side, our SEBI LODR compliance guide covers the disclosure obligations that sit alongside the PIT framework, and the UPSI definition itself now borrows directly from LODR Schedule III.

Sources and references

• SEBI Circular dated 21 April 2025 — trading window closure extended to immediate relatives of designated persons
• SEBI Circular — automation of continual disclosures under Regulation 7(2)
• India Code — Section 15G, SEBI Act, 1992 (penalty for insider trading)
• SEBI — Comprehensive FAQs on SEBI (PIT) Regulations, 2015
• ICSI — Advisory for SDD compliance by fiduciaries
• Taxmann — Overview of SEBI’s Prohibition of Insider Trading Regulations
• Vinod Kothari Consultants — analysis of the expanded UPSI list

Frequently asked questions

What is the penalty for insider trading under SEBI rules in 2026?

Under Section 15G of the SEBI Act, 1992, the penalty is a minimum of ₹10 lakh and can extend to ₹25 crore, or three times the profit made from the trade, whichever is higher. Record-keeping and disclosure failures carry their own penalties. Not maintaining a structured digital database can attract action under Section 15HB of up to ₹1 crore, and a missed disclosure under Regulation 7 can be penalised under Section 15A(b). The adjudicating officer decides the actual figure within these limits, weighing the profit involved, whether the breach was repeated, and how the person co-operated.

What is a structured digital database (SDD) under SEBI PIT Regulations?

A structured digital database is the internal, time-stamped record every listed company and fiduciary keeps under Regulation 3(5). It logs the nature of each item of unpublished price sensitive information, the names and PAN of the people who shared it, and the names and PAN of those who received it. The database cannot be outsourced and must carry internal controls such as time stamping so that entries cannot be back-dated. Under Regulation 3(6) it has to be preserved for at least eight years, and longer if SEBI is investigating.

When is the trading window closed under SEBI PIT Regulations?

For declaration of financial results, the window stays closed from the end of every quarter until 48 hours after the results are public. Designated persons and their immediate relatives cannot trade in the company’s securities during this time. The compliance officer can also close the window for other UPSI events. From 1 October 2025, the closure for immediate relatives is enforced automatically at all listed companies through the depositories, after a rollout that began with the top 500 companies on 1 July 2025.

Who is a designated person under the SEBI insider trading rules?

A designated person is anyone the board, with the compliance officer, identifies as having access to UPSI. The list usually includes promoters and the promoter group, directors, key managerial personnel, and employees in finance, accounts, secretarial and legal roles, along with their immediate relatives. Designated persons carry obligations ordinary shareholders do not: pre-clearance of trades above a set value, a six-month contra-trade bar, periodic disclosure of holdings, and the trading window restriction.

Does insider trading compliance apply before a company lists?

Yes. The PIT Regulations apply to securities that are listed or proposed to be listed, so an IPO-bound company comes within scope while it is still private. UPSI starts moving during due diligence and the drafting of the offer document, which is exactly when the controls need to exist. Build the code of conduct, the code of fair disclosure, the structured digital database and the trading window policy before filing. Merchant bankers and secretarial auditors check for these during IPO readiness, and an absent or thin SDD is a frequent finding that delays the timeline.

What is UPSI and how many categories does SEBI now recognise?

Unpublished price sensitive information is information about a company or its securities, not generally available, that is likely to move the price once it is published. After the amendment notified on 11 March 2025, the definition sets out 16 events, mapped to the material events in Schedule III of the LODR Regulations. Examples include financial results, dividends, fund raising, mergers and acquisitions, changes in key personnel, rating actions and one-time settlements with lenders. Because the list is wider, more board and management discussions are price sensitive by default and have to be logged in the SDD.

Disclaimer: This article is for general information and does not constitute legal advice. Insider trading rules apply differently depending on a company’s listing status and facts. Consult a practising Company Secretary or securities lawyer before acting. CS Sapna Malpani is a Practising Company Secretary based in Bangalore.