Revisiting SEBI’s Legitimate Purpose Exception: Implications Of 2024 And 2025 Amendments Of SEBI (Prohibition Of Insider Trading) Regulations, 2018 On Cross-Border M&A And Private Equity
- IJLLR Journal
- Aug 6
- 1 min read
Shrestha Saha, B.Com. LL.B. (Hons.), St. Xavier’s University, Kolkata
ABSTRACT
Insider trading is a significant threat to the integrity of the securities market. The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015 [‘PIT Regulations’] was enacted to curb insider trading by prohibiting sharing of undisclosed information and penalising profiting off such communication or knowledge of such information. The ‘legitimate purpose’ exception [‘the exception’] however enables sharing of such information for legitimate business deals. The recent amendments have made transactions and communication in the securities market more stringent, making it difficult for market participants to take advantage of the exception. This paper aims to provide an understanding of the exception along with the changes brought by the recent amendments of the PIT Regulations and analysing their application in Cross-border Mergers and Acquisition [‘M&A’] and Private Equity deals is. It argues that though the recent amendments have brought complex yet necessary changes in the PIT Regulations, it stands as a barrier for the globalisation of Indian market. Thus, rigorous internal control, meticulous vigilance and unambiguous regulatory guidance are essential for its effective application.
Keywords: PIT Regulations, the exception, Cross-border M&A and Private Equity deals.
