Who is a Designated Person & Why It Matters
In the age of real-time markets and digital access to sensitive data, preventing insider trading is not just good governance — it’s a legal mandate. The SEBI (Prohibition of Insider Trading) Regulations, 2015 (PIT Regulations) place significant compliance responsibilities on entities and individuals who have access to Unpublished Price Sensitive Information (UPSI).
One of the most critical elements under these regulations is the concept of a “Designated Person” (DP) — a category of individuals within or associated with a company who, due to their role or function, are more likely to come into contact with UPSI.
This blog dives into who qualifies as a Designated Person, what their responsibilities are, and how companies must manage and monitor their activities under the PIT framework.
Legal Reference
The term “Designated Person” is governed under:
- Regulation 9 and Schedule B of the SEBI (PIT) Regulations, 2015
- Circulars, FAQs, informal guidance and clarifications issued by SEBI from time to time
Who is a Designated Person?
There is no one-size-fits-all list. The Board of Directors, in consultation with the Compliance Officer, must identify Designated Persons based on roles, access to UPSI, and organizational hierarchy.
As per Regulation 9(4) of SEBI (PIT) Regulations, following persons are included in the definition of Designated Persons:
- Employees of listed company, intermediary or fiduciary designated on the basis of their functional role or access to unpublished price sensitive information (UPSI);
- Employees of material subsidiaries of listed company designated on the basis of their functional role or access to unpublished price sensitive information;
- All promoters;
- CEO and employees upto 2 levels below CEO of such listed company, intermediary, fiduciary and its material subsidiaries;
- Support staff of listed company, intermediary or fiduciary such as IT staff or secretarial staff who have access to UPSI.
Common Examples of Designated Persons Include:
- Promoters and promoter group members
- Directors, KMPs and SMPs
- Employees upto two level below CEO
- Support staff (admin, IT, secretarial, accounts) with access to UPSI
- Consultants, advisors, auditors, law firms, and external professionals
Access to UPSI — not seniority — is the key factor.
Obligations & Responsibilities of Designated Persons
| Obligation | Details |
|---|---|
| Disclosures | Submit initial, continual and annual disclosures |
| Code of Conduct | Must follow the company’s internal Code of Conduct for PIT (as per Schedule B) |
| Code of Practices and Procedures for Fair Disclosure of UPSI | Must adhere to the Code of Fair Disclosure of UPSI |
| Trading Window Restrictions | Cannot trade during trading window closure or when in possession of UPSI |
| Pre-clearance of trades | Required above a prescribed threshold (e.g. ₹10 lakhs) |
| Reporting of trades | Must disclose trades to the Compliance Officer within 2 trading days |
| Annual Disclosures | Must disclose details such as PAN, phone number, educational background, and past employers |
| Disclose Immediate Relatives | Must keep the company updated about changes in their immediate relatives |
| No contra trading | No buy and sell (or vice versa) of securities within 6 months |
| Post Resignation | Keep the Company updated with his address and contact details for one year and also not trade in shares of Company for next 6 months |
Company’s Obligations Towards Designated Persons
- Maintain a structured DP Master List
- Ensure training & awareness on PIT compliance
- Enforce trading window closures and monitor violations
Compliance Checklist for Companies
| Task | Frequency | Status |
|---|---|---|
| Appointment of Chief Investor Relation Officer | Once | ☐ |
| Formulation of Policy for inquiry in case of leak of UPSI | Once | ☐ |
| Formulation of Code as per Schedule B | Once | ☐ |
| Formulation of Code of Fair Disclosure of UPSI | Once | ☐ |
| Identify & review list of Designated Persons | Ongoing | ☐ |
| Maintenance of Chinese walls procedure | Ongoing | ☐ |
| Audit Committee is required to review compliances of PIT | Annually | ☐ |
| Obtain PAN, mobile, and educational details of DPs and their immediate relative | Annually | ☐ |
| Circulate & enforce Code of Conduct | Ongoing | ☐ |
| Monitor trading window & send alerts | Every window closure | ☐ |
| Track pre-clearance & contra trade violations | Ongoing | ☐ |
| Maintenance of Structured Digital Database | Ongoing | ☐ |
| Submit SEBI reports (if any violations) | As needed | ☐ |
FAQs on Designated Persons
1. Can an external consultant be a Designated Person?
Yes — if they are working on a sensitive mandate and may have access to UPSI.
2. Do Independent Directors qualify as Designated Persons?
Yes, in most cases. They attend Board/Committee meetings where UPSI is discussed.
3. Is the compliance officer automatically a Designated Person?
Yes. The Compliance Officer plays a key role in enforcing the PIT code.
4. Are immediate relatives also considered Designated Persons?
They are not DPs by themselves, but any trade by them is attributed to the DP and must be disclosed.
5. What are the consequences of violating PIT regulations?
Violations may lead to:
- Penalties under SEBI Act
- Disciplinary action by the company
- Reputational and legal risk
6. What is the definition of Immediate Relative?
Immediate Relative means:
- Spouse
- 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
7. Can a Designated Person claim ignorance if a trade is done by their spouse without informing them?
No. Under PIT Regulations, trades by immediate relatives are deemed to be trades by the Designated Person, unless proven otherwise. It’s the DP’s responsibility to educate, monitor, and disclose trades by their relatives. Ignorance is not a valid defense.
8. Can a DP resign to bypass trading restrictions and then trade?
No. If a person had access to UPSI during their tenure, SEBI can still hold them liable for trades done post-resignation — if UPSI was still unpublished when the trade occurred. Cooling-off periods are strongly advised for ex-DPs.
9. Are contra trades monitored manually? What if one slips through?
Companies are expected to have a monitoring mechanism in place — manual or automated. If a contra trade occurs and isn’t detected, the company’s compliance framework may come under scrutiny. That’s why trainings, regular audits and automated alerts are strongly recommended.
10. Can Designated Persons be tracked across group companies or subsidiaries?
Yes. SEBI expects listed companies to consolidate information from all subsidiaries and group entities, especially if they share UPSI. Each company must maintain and sync DP lists for accurate surveillance.
Summary
Designated Persons are the frontline defense in preventing insider trading. Identifying them correctly, training them well, and monitoring their trades is essential for regulatory compliance under SEBI’s PIT Regulations. For companies, it’s not just about enforcement — it’s about creating a culture of transparency, accountability, and ethical leadership. It is necessary to provide them regular trainings to ensure compliance with PIT Regulations.
Let us know your needs — we’re here to help ensure your PIT framework is audit-ready and airtight.
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