In a significant regulatory development, the Securities and Exchange Board of India (SEBI) has further tightened its grip on insider trading practices. Through its circular dated April 21, 2025, SEBI has extended PAN-level security freeze during trading window closures on account of declaration of financial results to immediate relatives of Designated Persons (DPs).
This marks a proactive step in curbing indirect insider trading and strengthens compliance under the SEBI (Prohibition of Insider Trading) Regulations, 2015.
Earlier a Consultation Paper was issued on February 7, 2025 for inviting public comments on the same.
Table of Contents
- Background: Evolution of PAN Freezing
- What’s New in the April 21, 2025 Circular
- Who Is Considered an “Immediate Relative”?
- Implications for Listed Companies
- Compliance Best Practices
- FAQs on PAN Freezing for Immediate Relatives
- Conclusion
1. Background: Evolution of PAN Freezing in Insider Trading Compliance
SEBI first introduced PAN freezing at the security level in 2022, applicable to companies in benchmark indices like Nifty 50 and Sensex. In July 2023, the framework was expanded to all listed companies, targeting Designated Persons — such as directors, KMPs, and key employees likely to have access to Unpublished Price Sensitive Information (UPSI).
The Clause 4(1) of Schedule B of Insider Trading Regulations state:
Designated persons and their immediate relatives shall not trade in securities when the trading window is closed.
Now, through the April 2025 update, immediate relatives of these designated persons have been brought within the regulatory net, plugging potential gaps in enforcement. This will also prevent inadvertent non-compliance of the aforesaid clause.
2. What’s New in the April 21, 2025 Circular?
2.1. PAN Freeze Extended to Immediate Relatives
- PANs of immediate relatives of DPs will now be frozen at the security level during trading window closure periods on account of declaration of financial results.
- This prevents them from buying/selling securities of the listed entity when trading is prohibited.
2.2. Trading Window Closure Trigger
- The freeze is automatically applied from the end of every quarter till 48 hours after the declaration of financial results, or during other UPSI events.
- Applies to Designated Persons and their immediate relatives.
2.3. Applicability
SEBI has rolled out a phase wise implementation of the Circular as under:
| Phase | Companies to be covered | PAN – ISIN freeze start date |
| 1 | Top 500 companies based on BSE market capitalization as of March 31, 2025, listed on BSE, NSE and MSEI | July 01, 2025 |
| 2 | All the remaining companies listed on BSE, NSE, and MSEI, as well as companies that get listed on stock exchanges after the issuance of this circular | October 01, 2025 |
3.Who Are Immediate Relatives Under SEBI PIT Regulations?
As per Regulation 2(f) of the SEBI (PIT) Regulations:
“Immediate relative” means:
- Spouse; and
- Parents, Sibling(s) and Children (including those 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.
These individuals are presumed to have access to UPSI due to their close connection with Designated Persons.
4. Implications for Listed Companies
4.1. Process for implementation of system
- Listed Entity to provide following information of the immediate relatives to the Designated Depository:
- Name
- PAN
- Demat account number (in case of PAN exempted cases)
- Listed Entity to provide the date of commencement and date of end of trading window closure to the designated depository
- 1st day immediately after the end of every quarter for which results are to be announced, shall be ‘Trading Window Closure commencement date’.
- Date on which 48 hours ends post disclosure of financial results, shall be ‘Trading Window Closure End date’
- The listed company shall provide the aforesaid details atleast 2 trading days prior to the commencement of trading window closure date
- Listed entity may exempt any person from these provisions as per clause 4(3) of Schedule B of PIT Regulations
4.2. Increased Compliance Responsibility
- Listed entities must collect and maintain Name and PANs of immediate relatives of all DPs.
- Listed entities must inform the DPs and their immediate relatives in advance about freezing of their PANs during trading window closure.
- Keep a track of appointment of new DPs and updating the same with Designated Depository promptly.
4.3. Risk of Breach for Non-Reporting
- Non-submission or incorrect disclosure of relatives’ details can be treated as a compliance lapse.
- May attract internal penalties or regulatory scrutiny from SEBI.
5. Compliance Checklist for Companies & Compliance Officers
| Task | Action Item |
|---|---|
| Collection of Name & PANs of immediate relatives | Use declaration forms from DPs |
| Updating the details of new DPs | Keep a track of new appointments |
| Update Structured Digital Database (SDD) | Capture data access, sharing, and trades |
| Employee Training & Awareness | Conduct periodic sessions for DPs & families |
| Trading Window Communication | Issue timely notices for closure periods |
| System Integration with RTA/Depositories | Ensure automation of PAN-level freeze |
6. FAQs: PAN Freezing for Immediate Relatives
1. Why has SEBI extended PAN freezing to immediate relatives?
To prevent indirect insider trading and ensure UPSI is not leaked through family members.
2. Who must submit the PAN details of immediate relatives?
The Designated Person must provide this information to the company’s Compliance Officer.
3. Can a relative still trade during open windows?
Yes — provided no UPSI is possessed, and the trading window is open. The trade value should not exceed the prescribed threshold.
4. Does the freeze apply to private companies or subsidiaries?
No. This applies only to listed entities, although group entities may voluntarily implement similar measures.
5. What happens if a DP forgets to submit PAN of a relative?
It may be considered a policy breach, and companies should have internal penalties in place.
6. What information to be given in case of PAN exempt entity?
The demat account number viz. DP ID and client ID can be given in this case.
7. Can any updation/ addition/ deletion be done to the information given to depository?
Yes. The same shall be effected within 2 trading days of receipt of intimation.
8. Can a newly married spouse of a Designated Person trade if not yet disclosed?
No. The moment the spouse qualifies as an immediate relative, they come under the purview of the PIT Regulations.
9. What if a Designated Person is estranged from a relative—are they still covered?
If the relative continues to meet the definition under Regulation 2(f), they are still considered an immediate relative. The relationship status alone does not nullify the compliance obligation.
10. Are trades by relatives in unrelated companies also frozen?
No. The PAN freeze applies only to the securities of the listed company where the DP is associated.
7. Conclusion
The April 21, 2025 SEBI Circular is a pivotal move in tightening the insider trading framework in India. By covering immediate relatives, SEBI addresses a critical blind spot and strengthens the integrity of the capital markets.
Companies should immediately:
- Update compliance checklists
- Collect PANs/ Demat account numbers, from all DPs and their immediate relatives
- Automate freeze mechanisms
URGENT: SEBI Extends PAN Freeze to Immediate Relatives – Action Required NOW!
SEBI’s April 21, 2025 circular just changed the game for insider trading compliance. Listed companies have LIMITED TIME to comply before the July 1st deadline for top 500 companies.
CRITICAL DEADLINES APPROACHING:
- July 1, 2025: Top 500 companies (by BSE market cap)
- October 1, 2025: All remaining listed companies
IMMEDIATE ACTION REQUIRED:
FOR COMPLIANCE OFFICERS:
- COLLECT NOW: Name & PAN of ALL immediate relatives of Designated Persons
- UPDATE SYSTEMS: Integrate with RTAs/Depositories for automated PAN freezing
- NOTIFY STAKEHOLDERS: Inform all DPs about new requirements immediately
- TRAIN YOUR TEAM: Conduct emergency training sessions on expanded scope
FOR DESIGNATED PERSONS:
- DECLARE TODAY: Submit PAN details of spouse, financially dependent parents, siblings & children
- INFORM FAMILY: Educate relatives about trading restrictions during window closures
- DOCUMENT EVERYTHING: Maintain updated records of all immediate relatives
The clock is ticking. Ensure your company is compliant before SEBI’s enforcement begins.
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