Trading Window Bar Not Applicable to Pre-Cleared Gift of Shares | SEBI

Informal Guidance No. SEBI/HO/CFD/PoD-1/OW/P/2025/6753/1; Dated: 03.03.2025

A target company recently approached the Securities and Exchange Board of India (SEBI) for informal guidance regarding the permissibility of certain off-market transactions during the trading window closure period under the SEBI (Prohibition of Insider Trading) Regulations, 2015 (PIT Regulations).

1. Query – Gift of Shares During Trading Window Closure

The company sought clarification on whether off-market inter-se gifts of shares by promoters to their sons (who are also classified as promoters) can be executed during the trading window closure period. Further, the company asked whether such gifts would require pre-clearance from the compliance officer, as mandated under the internal code of conduct.

2. SEBI’s Clarification – Trading Window Norms Not Applicable in This Case

SEBI clarified that the trading window closure restrictions will not apply to such off-market inter-se gifts provided the following conditions are met:

• The transaction is executed in compliance with Regulation 4(1) of the PIT Regulations, which governs legitimate purposes under structured digital databases and permitted insider transactions.
• Prior clearance from the compliance officer is obtained before executing the transaction.

3. Key Takeaway – Conditional Exemption Available

While trading window norms generally restrict insiders from executing trades during specific blackout periods, SEBI has reaffirmed that inter-se gifts between immediate relatives/promoters are exempted when:

1. The transaction qualifies as a bona fide gift, and
2. It is pre-cleared by the compliance officer in accordance with the company’s internal code.

4. Conclusion

This clarification provides relief and procedural clarity to listed entities and their promoters regarding genuine intra-family share transfers, particularly during sensitive periods like trading window closures. However, compliance with internal governance processes and SEBI regulations remains essential to avoid regulatory breaches.

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