SEBI's General PIT FAQs: Governance Questions Every Compliance Officer Should Have Answered

Source: SEBI's Comprehensive FAQs on SEBI (PIT) Regulations, 2015, dated December 31, 2024 — Section J, "General" (Q.53–Q.59), the final section, addressing cross-cutting questions that didn't fit neatly into the earlier subject-wise categories.

Why this section matters

The "General" section is a useful closing grab-bag precisely because it covers governance questions that don't come up often, but are high-stakes when they do: who approves the compliance officer's own trades, how roles and responsibilities split when a company has both a CIRO and a compliance officer, cross-border employees, and where the boundary of "immediate relative" actually sits.

Q53 — ADR/GDR trading by foreign-national employees is fully in scope

Trading in ADRs/GDRs of listed Indian companies is covered by the code of conduct, including for foreign-national employees who are designated persons — using a unique identifier analogous to PAN for their disclosures where they don't have one. If your company has ADR/GDR-listed securities and foreign designated persons, don't treat ADR/GDR trades as outside your code of conduct's reach simply because they trade on a foreign exchange.

Q54 — The Board approves the compliance officer's own trades

What SEBI clarifies: When the compliance officer (or their immediate relatives) wants to trade as an insider, the board of directors is the approving authority — not the compliance officer approving themselves, and the board may set whatever additional procedure it deems necessary.

What SEBI intends: This is an obvious but important conflict-of-interest fix — the person who normally grants pre-clearance can't be the one clearing their own trades. Make sure your code of conduct explicitly names the board (or a board-delegated committee) as the approval path for the compliance officer's personal and immediate-relative trades, rather than leaving this as an unstated assumption.

Q55 — Group entities can run separate codes of conduct

A listed company and each intermediary within the same group can adopt separate codes of conduct, tailored to the entity concerned, rather than being forced into one uniform group-wide code. Useful to know if your group includes a listed company alongside intermediary/fiduciary entities with meaningfully different risk profiles — you're not required to force-fit them into a single document.

Q56 — CIRO and compliance officer responsibilities can overlap, and liability follows accordingly

What SEBI clarifies: Specific responsibility for dissemination/non-disclosure of UPSI sits with the Chief Investor Relations Officer (CIRO) under Schedule A, Clause 3, distinct from the compliance officer's role under Regulation 2(c). A company can appoint separate people to each role. But where the two roles' functions overlap (or, presumably, where one person holds both titles), CIRO and compliance officer are jointly and severally responsible.

Practical takeaway: If your company has a distinct CIRO, get the division of responsibility between CIRO and compliance officer written down clearly enough that "overlapping functions" doesn't become the default characterization of your entire information-dissemination process — joint-and-several liability is a real exposure you want to define the boundaries of in advance, not discover during an enforcement inquiry.

Q57 — A financially independent spouse is still presumed an "immediate relative," rebuttably

What SEBI clarifies: A spouse is presumed to be an immediate relative under the regulations unless that presumption is specifically rebutted — financial independence and non-consultation on trading decisions do not, by themselves, automatically remove the spouse from "immediate relative" status.

What SEBI intends: This is a deliberately high bar. If financial independence alone were enough to exit "immediate relative" status, it would create an easy, hard-to-verify basis for designated persons to argue their spouse's trades fall outside the regulatory net. By making it a rebuttable presumption rather than a bright-line exclusion, SEBI keeps the default assumption protective, while still leaving room for genuinely separate spouses (which the FAQ doesn't further define) to make their case.

Practical takeaway: Don't accept a designated person's assertion that "my spouse trades independently" as sufficient to exclude the spouse from your compliance monitoring — treat every spouse as an immediate relative by default, and require the DP to affirmatively substantiate any claimed rebuttal before you adjust your monitoring.

Q58 — "Investment company" promoters of intermediaries are DPs; other corporate promoters aren't automatically

Regulation 9(4)(iii)'s reference to "investment company" promoters of intermediaries/fiduciaries is narrowly targeted at non-individual corporate promoters whose principal activity is investing in other companies' securities. SEBI's own example is clarifying: a bank that happens to be the promoter of a broking entity is not, by that fact alone, a designated person — but an investment company promoter holding a portfolio of investments across companies is. If your intermediary's promoter is itself a corporate entity, check its principal business activity, not just its status as "promoter," before deciding DP status.

Q59 — CIRP bidders with UPSI access are bound by PIT Regulations

Entities participating as prospective bidders in a Corporate Insolvency Resolution Process for a listed company must comply with PIT Regulations if they had access to UPSI during the bidding process — covering purchases/sales on-exchange, on a preferential basis, or through any bidding process. This extends the "access, not role" principle (Section A, Q3; Section I, Q49) to a scenario outside the usual employee/promoter context: a bidder is treated as an insider the moment CIRP due diligence gives them UPSI access, regardless of whether they end up winning the bid.

Bottom line for your compliance checklist

Confirm your code of conduct reaches ADR/GDR trades by foreign-national designated persons, with an alternate identifier where PAN isn't available.
Name the board (or a board committee) explicitly as the approving authority for the compliance officer's own and immediate relatives' trades.
Consider separate, tailored codes of conduct for group entities rather than one uniform document, if risk profiles genuinely differ.
Document the CIRO/compliance officer division of responsibility clearly to bound joint-and-several liability exposure.
Treat every DP's spouse as an immediate relative by default; require affirmative substantiation before excluding one.
Check a corporate promoter's principal business activity before assuming (or ruling out) designated-person status under the "investment company" test.
If your company is under CIRP, ensure prospective bidders with UPSI access during due diligence are put on notice of their PIT obligations.

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.