SEBI Bars Immediate Family of Insiders From Trading During Window Closure Period [Read Circular]

The Securities and Exchange Board of India (SEBI) has announced new rules to stop the immediate family members of company insiders from buying or selling shares during sensitive periods when financial results are about to be declared. This rule is meant to prevent the misuse of unpublished price-sensitive information (UPSI) and make the stock market more fair and transparent.

According to the SEBI circular issued on April 21, 2025, family members of designated persons (DPs) — such as senior executives, directors, or other key employees will now also face automatic trading restrictions during the trading window closure period. Until now, these restrictions directly applied only to the insiders themselves, but now their immediate relatives will also be included.

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The trading window closure period is a block of time when certain people connected to a company (like its top management or key employees) are not allowed to trade in that company’s shares. This happens mainly around the time when the company is preparing to announce its financial results.

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The goal is to make sure that people who may have access to sensitive financial information (which is not yet public) cannot use that information to their advantage by trading in the company’s shares.

What Has Changed?

SEBI has now extended this restriction to include the immediate relatives of these insiders. This means that even family members like spouses, children, or parents of key company officials will not be able to trade in the company’s shares during the window closure period.

To make sure this rule is followed strictly, SEBI has asked Depositories and Stock Exchanges to freeze the PAN-linked demat accounts of these family members during the restricted period. The system will automatically block both on-market and off-market transactions for these accounts.

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How Will This Be Implemented?

The implementation will happen in two phases:

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• Phase 1: From July 1, 2025, for the top 500 listed companies based on market capitalization.
• Phase 2: From October 1, 2025, for all other listed companies.

Listed companies will need to share the details of their designated persons and their immediate relatives, including their PAN and demat account information, with the designated depository. This data will then be used to freeze the trading rights during the window closure.

SEBI’s Message to Stock Exchanges and Depositories

The Depositories and Stock Exchanges have been asked to:

• Implement the system as per the guidelines.
• Share regular reports with SEBI on the enforcement of the new rules.
• Inform all listed companies about these changes and update their websites accordingly.

To Read the full text of the Circular CLICK HERE

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