Pre-clearance of trades by designated persons
The approval a designated person needs from the compliance officer before trading above the threshold the company's board sets.
Standing duty, no filing date
- SEBI
- Insider trading and takeovers
- Not specified
- 2026-09-01
There is no statutory date, because the threshold and the approval window are set by the company. Clause 6 of Schedule B to the PIT Regulations requires designated persons to obtain pre-clearance before trading in the company's securities above a limit the board stipulates. Clause 8 requires the person to declare, before approval, that they hold no unpublished price sensitive information. Pre-clearance is refused during a trading window closure.
Nothing about pre-clearance changed in the 2025 amendment. The point worth knowing is that clause 7 of Schedule B is omitted, so guidance that cites it is out of date.
Deadlines counted from an event
Designated persons obtain pre-clearance before any trade above the value the board stipulates in the code of conduct. Schedule B clause 6 sets the requirement and leaves the threshold to the board, so no universal figure or date exists. Clause 8 requires a declaration that the person holds no unpublished price sensitive information before approval is given.
The rule
Designated persons obtain pre-clearance before any trade above the value the board stipulates in the code of conduct. Schedule B clause 6 sets the requirement and leaves the threshold to the board, so no universal figure or date exists. Clause 8 requires a declaration that the person holds no unpublished price sensitive information before approval is given.
Who must comply
- Designated persons identified under the company's code of conduct
- The compliance officer, who approves or refuses each request
- Trades below the threshold the board stipulates need no pre-clearance, though the code of conduct may still require an intimation
- A trade executed under an approved trading plan under Reg 5 follows the plan rather than the pre-clearance route
Statutory basis
Before you file
- Fix the pre-clearance threshold in the board-approved code of conduct.
- Confirm that the trading window is open.
- Prepare the declaration that clause 8 requires.
- Identify the securities and the quantity to be traded.
How to file
- Apply to the compliance officer for pre-clearance.
- Declare that you hold no unpublished price sensitive information.
- Wait for the compliance officer's approval.
- Execute the trade within the period the code of conduct allows.
- Report the executed trade to the compliance officer as the code requires.
If you miss it
Trading without pre-clearance is a code of conduct breach. Clause 12 of Schedule B requires the company to take action against the person, and any amount the company collects goes to the SEBI Investor Protection and Education Fund. Where the person also held unpublished price sensitive information at the time, SEBI adjudicates under section 15G of the SEBI Act at ₹25 crore or three times the profit made, whichever is higher.
- The company reports the breach to the stock exchange under clause 13 of Schedule B, so the lapse becomes public
- Companies commonly bar the person from trading for a period as part of the code, which the code itself sets rather than the regulation
Recent changes affecting this
Common questions
What is the pre-clearance threshold?
Whatever the company's board stipulates. Clause 6 of Schedule B leaves the figure to the board, so it varies between companies and there is no statutory amount.
Is clause 7 of Schedule B still in force?
No. The consolidated text shows clause 7 as omitted. Clause 6 sets the pre-clearance requirement and clause 8 the declaration that precedes approval.