The Securities Exchange Board of India (“SEBI”), in exercise of powers conferred under Section 11(1) of the Securities and Exchange Board of India Act, 1992 read with Regulations 4(3) and 11 of the SEBI (Prohibition of Insider Trading) Regulations, 2015 (“PIT Regulations”), issued a circular, vide Circular No. SEBI/HO/ISD/ISD-PoD-2/P/CIR/2024/180[1], dated December 30, 2024, regarding the allowance of subscription to the issuance of non-convertible securities during trading window closure period (“Circular”). The provisions of this Circular shall come into force with immediate effect.
Whereas Clause 4(3)(b) of Schedule B read with Regulation 9(1) of the PIT Regulations provide that the trading window restrictions shall not apply to certain transactions, including: (i) Acquisition by conversion of warrants or debentures; (ii) Subscription to rights issues, further public issues, preferential allotments, or tendering of shares in a buy-back offer, open offer, or delisting offer; (iii) Other transactions undertaken in accordance with the mechanisms as specified by the board from time to time.
In line with this, SEBI vide Circular No. SEBI/HO/ISD/ISD/CIR/P/2020/133, dated July 23, 2020, further clarified that, in addition to the transactions mentioned in Clause 4(3)(b) of Schedule B read with Regulation 9 of PIT Regulations, trading window restrictions shall also not be applicable to the transactions related to Offer for Sale (OFS) and rights entitlements, carried out in accordance with the framework specified by board from time to time.
Finally, SEBI has now decided to expand the list of exempted transactions. In addition to the transactions previously mentioned in Clause 4(3)(b) of Schedule B read with Regulation 9(1) of PIT Regulations and SEBI Circular No. SEBI/HO/ISD/ISD/CIR/P/2020/133 dated July 23, 2020, trading window restrictions shall also not apply to the subscription to non-convertible securities, carried out in accordance with the framework prescribed by the board from time to time.
To ensure compliance, stock exchanges have been directed to bring the provisions of this Circular to the attention of all listed companies and to disseminate the information on their websites.
[1]https://www.sebi.gov.in/legal/circulars/dec-2024/allowing-subscription-to-the-issue-of-non-convertible-securities-during-trading-window-closure-period_90338.html