Decoding SEBI's Revised Trading Plan FAQs (December 2024): A Practical Guide

Source: SEBI's Comprehensive FAQs on SEBI (PIT) Regulations, 2015, dated December 31, 2024 — Section D, "Trading Plan" (Q.16–Q.16H). Per the FAQ's own preface, this was the specific area SEBI revised and expanded in the December 2024 update — making it the single most topical section of the current document.

Why SEBI keeps returning to trading plans

A trading plan (Regulation 5) exists to give insiders a legitimate, pre-committed way to trade even though they may later come into possession of UPSI — provided the plan was formulated before the UPSI existed. It's a good idea in principle: it lets genuine long-term shareholders (promoters, KMPs) trade on a schedule without the trade itself being read as opportunistic. In practice, trading plans have historically been under-used, partly because the mechanics were unclear and inflexible. The December 2024 FAQ revision (Q16 substituted, Q16A–16H newly inserted) reads like SEBI trying to make the trading-plan route genuinely usable, while closing obvious loopholes. Here's what changed and what it signals.

Q16 — A materially more insider-friendly answer than before

What changed: The FAQ explicitly preserves the old answer in a footnote, which makes the shift easy to see. The pre-Dec-2024 answer said: if an insider trades based on earlier UPSI that is still not generally available, that's a violation — only new UPSI arising after plan formulation was safe to trade through. The revised Dec-2024 answer drops that first sentence entirely and simply confirms: if there was no UPSI at the time the plan was formulated, trading can proceed under the plan even if new UPSI has since arisen and is still not public.

What SEBI intends: This looks like a clarification that the trading plan mechanism's core protection was always meant to apply straightforwardly to after-arising UPSI — the earlier wording's ambiguity about "earlier UPSI" was creating uncertainty that discouraged use of trading plans. Compliance officers should read this as SEBI affirmatively encouraging the trading-plan route as the clean, defensible way for insiders to trade during periods when UPSI may exist.

Q16A — No fixed plan duration, but a hard 120-day cooling-off

There's no minimum or maximum duration for a trading plan itself, but a mandatory 120-calendar-day cooling-off period applies between public disclosure of the plan and the first trade under it. For your compliance calendar: this means trading plans are a tool for planned, medium-term liquidity events, not a quick-turnaround mechanism — build the 120-day lead time into any advice you give promoters/KMPs who ask about using one.

Q16B & Q16C — Price limits are optional, but if used, they're capped at 20%

A trading plan must specify the trade value or quantity, buy/sell direction, and either a specific date or a window of up to 5 consecutive trading days. A price limit is optional — but if the insider chooses to specify one, it can only be up to 20% away from the closing price on the day before the plan is submitted for approval (an upper limit for buys, lower limit for sells), and the insider must not execute if the market moves outside that band at execution time.

What SEBI intends: The 20% band is a deliberate ceiling on how much discretion an insider retains. Without it, an insider could set a price limit so conservative that the "commitment" in the trading plan becomes illusory — effectively giving them an option to trade only if it's favorable, which defeats the purpose of demonstrating the trade wasn't opportunistic. Compliance officers reviewing trading plans for approval should treat any price limit outside this 20% band as a rejection trigger, not a negotiable term.

Q16D — The narrow, closed list of permissible deviations

Deviation from an approved plan is allowed only for: permanent incapacity/bankruptcy/operation of law, non-implementation because UPSI held at formulation is still not public at the intended implementation date, or the execution-time price falling outside the specified limit. Any full/partial non-implementation must be reported to the Compliance Officer within two trading days of the plan's tenure ending, with reasons and supporting documents. The plan automatically lapses on the insider's death.

Practical takeaway: This is a closed list, not an illustrative one. As Compliance Officer, if an insider comes to you wanting to deviate for a reason not on this list (e.g., "I just changed my mind" or "I need the cash for something else"), the FAQ gives you no basis to bless that deviation — the trade either executes as planned or the plan lapses for one of the four listed reasons, full stop.

Q16E, Q16F, Q16G — Multiple plans, no pre-clearance, but contra-trade still bites

Multiple simultaneous plans are allowed, provided their covered periods don't overlap.
No separate pre-clearance is needed for trades executed under an already-approved plan — the plan approval itself is the clearance mechanism, so don't make insiders go through pre-clearance twice.
Contra-trade restrictions still apply across two separate trading plans. This is an important one to flag to insiders: approving a sell under Plan A does not give a clean slate for a buy under Plan B within the contra-trade window — SEBI is closing off an obvious attempt to use "separate plans" as a way to route around contra-trade restrictions.

Q16H — Corporate actions: adjustment allowed, but only for bonus/split, and only with sign-off

If a bonus issue or stock split occurs between plan approval and implementation, the insider may adjust the quantity and price limit — but only with the Compliance Officer's approval, and the modified plan must be notified to the stock exchanges. Note what's not on this list: other corporate actions (rights issues, buybacks, mergers) aren't mentioned, so don't extend this adjustment mechanism by analogy without first checking whether SEBI addresses it elsewhere or whether the safer route is to let the plan run as originally approved (or lapse under Q16D) rather than improvise an adjustment.

Bottom line for your compliance checklist

Update your trading plan template/checklist to reflect the Dec 2024 position on Q16 — pre-existing UPSI risk is about the state at formulation, not what happens to disclosure timing later.
Build the 120-day cooling-off period into any promoter/KMP communication about trading plan timelines.
Reject (or send back for revision) any proposed price limit outside the 20% band — this is a bright-line test, not a judgment call.
Keep the Q16D deviation list handy as your only basis for excusing non-implementation — don't improvise beyond it.
When an insider runs multiple plans, explicitly check contra-trade exposure across plans, not just within each plan individually.
Restrict corporate-action adjustments to bonus/split scenarios only, with your sign-off and exchange notification, until SEBI clarifies other corporate actions.

This article interprets SEBI's published FAQ for general informational purposes and reflects our reading of the source document as of the date of publication. It is not legal advice and should not be treated as a substitute for the actual text of the PIT Regulations, applicable circulars, or advice from a qualified professional. Readers should independently verify current requirements against SEBI's website before acting.