Integrated Business Solutions (Multidisciplinary Case Study with Strategic Management) · Corporate and Economic Laws

SEBI LODR, Takeover and Insider Trading Regulations for CA Final IBS

Updated 5 October 2026 · Fact-checked

These are three SEBI regulations for listed companies. LODR sets ongoing disclosure and governance duties. SAST controls acquisition of shares and control, with open offers on crossing limits. PIT bans trading on unpublished price sensitive information. To solve a case, identify the regulation, match the facts to its trigger, apply the rule, and conclude.

Understand SEBI LODR, Takeover and Insider Trading Regulations

A listed company is answerable to the public, so SEBI regulates it through several sets of rules. For IBS case studies you mostly need three: LODR, SAST and PIT. Each answers a different question.

SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 answer: what must a listed entity disclose and how must it be governed? It covers board composition, committees (audit, nomination and remuneration, stakeholders relationship, risk management where applicable), related party transactions, and prompt disclosure of material events to stock exchanges. It also sets periodic filings such as quarterly financial results and shareholding patterns.

SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 answer: who is buying control, and must they give other shareholders an exit? If an acquirer, with persons acting in concert (PACs), crosses a threshold of shares or voting rights, or acquires control, they must make an open offer to public shareholders.

SEBI (Prohibition of Insider Trading) Regulations, 2015 answer: who may trade on what information? An insider must not trade while holding unpublished price sensitive information (UPSI), and must not communicate it except for legitimate purposes. Companies must keep a code of conduct, a trading window and a structured digital database.

The easy way to separate them: LODR is about the company's own ongoing duties, SAST is about the buyer's duties on acquiring shares or control, and PIT is about the individual's duties on using information. One case may touch all three, for example a planned acquisition: the board must disclose it under LODR when it is material, the buyer may trigger SAST, and everyone who knows of it before disclosure holds UPSI under PIT.

Key rules to remember

SAST initial trigger: Acquirer + PACs ≥ 25% of voting rights → open offer; Applies when shares or voting rights, taken together with PACs, would entitle the acquirer to 25% or more. Acquiring control, irrespective of shareholding, also triggers an open offer.
SAST creeping acquisition: Holding 25% to less than 75% → may acquire up to 5% in a financial year without an open offer; The holder must already have 25% or more but not exceed the maximum permissible non-public shareholding. Acquisition beyond 5% in a year triggers an open offer.
SAST minimum offer size: Open offer size ≥ 26% of the total shares of the target company; The offer must be for at least 26% of the total shares of the target company, measured as of the 10th working day from the closure of the tendering period.
SAST disclosure thresholds: Acquirer (with PACs) acquires 5% or more → disclose; thereafter disclose on every change of 2% or more; An acquirer who, together with PACs, acquires shares or voting rights of 5% or more must disclose, and must disclose again on every change of 2% or more. The disclosure goes to the stock exchanges and the target company within 2 working days. Promoters also make annual disclosures of their holdings.
PIT definition of UPSI: UPSI = information not generally available which, on becoming available, is likely to materially affect the price of securities; Examples listed in the Regulations include financial results, dividends, change in capital structure, mergers, demergers, acquisitions, delisting, disposals and changes in key managerial personnel.
PIT trading window: Trading window closed when the compliance officer determines that designated persons may have UPSI; Designated persons cannot trade while the window is closed. The Regulations do not fix one period. The usual practice is to close the window from the end of each quarter until 48 hours after results are declared.
PIT continual disclosure: Trade value above ₹10 lakh in a calendar quarter → disclosure to the company within 2 trading days; Under Reg 7(2), this applies to promoters, members of the promoter group, directors and designated persons. The company then informs the exchanges within 2 trading days of receipt. The trading window and pre-clearance requirements are separate: they are part of the code of conduct, and pre-clearance applies to trades above a threshold set by the company.
LODR board composition: At least one-half of the board non-executive. Independent directors: at least one-third if the chairperson is non-executive; at least one-half if the chairperson is executive, or is a promoter or related to a promoter. At least one woman director.; Apply the independent director proportion by first identifying the chairperson's status. Some board requirements apply only to specified classes of listed entities, so check the applicability given in the facts.
LODR audit committee: Minimum three directors; two-thirds independent directors; chairperson independent; Applies to listed entities that must constitute it. Quorum is two members or one-third of members, whichever is higher, with at least two independent directors.
LODR results timeline: Quarterly results within 45 days of quarter end; annual audited results within 60 days of financial year end; The Q4 results are the annual audited results, filed within 60 days of year end. The board meeting outcome is intimated to the exchanges.

How to solve SEBI LODR, Takeover and Insider Trading Regulations questions

Use the same sequence for any case on listed company compliance. It keeps the answer in provision-facts-conclusion form and stops you mixing regulations.

1Read the facts and underline the numbers: percentages of shares, dates, values of trades, designations of persons.
2Name the regulation being tested: LODR (company duty), SAST (acquisition or control) or PIT (use of UPSI). Cases often test more than one.
3State the rule in one line in plain words, including the exact threshold or time limit.
4Apply the rule to the facts with a calculation, such as adding the acquirer's and PACs' holdings, or counting days from the trigger date.
5Check for exceptions or conditions: creeping acquisition, whether the person is an insider or designated person, whether the information is UPSI, whether the information was already public.
6Conclude clearly: open offer required or not, trade allowed or not, disclosure due by when, and the consequence of non-compliance.
7If the question asks for advice, add the practical action: file the disclosure, close the trading window, make the public announcement, or ratify through the audit committee.

Quickest way: Three-question triage

When to use it: Use this for MCQs and short case parts when you have about two minutes.

Ask: is this about the company's duty, the buyer's holding, or someone's trade? That picks LODR, SAST or PIT.
For SAST, add up the acquirer and PACs, then compare with 25% and, for creeping, 5% a year.
For PIT, ask: is the information unpublished and price sensitive, and is the person an insider? If both yes, trading is barred.
For LODR, look for a time limit or a committee composition number and compare it with the facts.
Write the conclusion in one sentence with the rule and the number.

Common mistakes in SEBI LODR, Takeover and Insider Trading Regulations

Treating the 25% trigger as applying to the acquirer alone.
Students forget persons acting in concert when reading the facts.
Fix: Always add the holdings of PACs before comparing with the trigger.
Saying an open offer is needed only when 25% is crossed.
The limit is memorised as a number and the control trigger is ignored.
Fix: Remember that acquiring control, even with a small holding, also triggers an open offer.
Applying the creeping acquisition limit to a holder below 25%.
The 5% figure is recalled without its condition.
Fix: State that creeping is available only to those already holding 25% or more but below the maximum permissible non-public shareholding.
Treating all non-public information as UPSI.
Students overlook the 'materially affect price' test.
Fix: Test both limbs: not generally available, and likely to materially affect price. Routine internal information is not UPSI.
Assuming insider trading rules apply only to directors.
The word 'insider' is read narrowly.
Fix: Insiders include connected persons and anyone in possession of UPSI, such as auditors, consultants or bankers. Designated persons are a separate group for the code of conduct.
Mixing up time limits across LODR, SAST and PIT.
Many numbers look alike: 45 days, 60 days, 2 trading days, 48 hours.
Fix: Tie each number to its regulation and event in a one-line table of your own, and revise it daily before the exam.

Worked examples

Example 1

Alpha Ltd is listed. Ravi holds 21% of its voting rights. His wife, Meena, who is acting in concert with him, holds 3%. Ravi now buys 2% more through the market. He has not been an acquirer before and does not seek to change the management. Does Ravi have to make an open offer?

Show the solution

Rule: an acquirer who, together with PACs, would hold 25% or more of voting rights must make an open offer.
Compute: Ravi 21% + 2% = 23%. Add Meena 3%. Total = 26%.
Compare with the trigger: 26% is above 25%, so the threshold is crossed with the PAC holding included.
Check exceptions: creeping acquisition applies only to those already at 25% or more before the purchase. Before the purchase the group held 24%, so it is not available.
Conclude: the trigger is crossed, so an open offer is required.

Answer: Yes. Ravi and Meena together would hold 26%, which crosses the 25% trigger, and creeping acquisition is unavailable because they held only 24% before the purchase. An open offer to public shareholders is required.

Example 2

Beta Ltd is listed and plans to acquire a competitor. On 10 March the board approves the deal, but it is not yet announced. On 11 March, Sunil, the finance manager, tells his friend Karan, who is not connected to Beta, about the deal. Karan buys Beta shares on 12 March. The deal is announced on 15 March and the price rises sharply. Comment under the PIT Regulations.

Show the solution

Identify the information: a proposed acquisition is listed in the Regulations as an example of UPSI. It was unpublished until 15 March and likely to materially affect price.
Identify the persons: Sunil, as finance manager, is a connected person and an insider. Karan is in possession of UPSI, so he is also an insider as defined, even though unconnected.
Apply the communication rule: an insider must not communicate UPSI except for legitimate purposes, performance of duties or discharge of legal obligations. Telling a friend is none of these, so Sunil has contravened the rule.
Apply the trading rule: an insider in possession of UPSI must not trade. Karan traded on 12 March, before the information became public, so he is presumed to have traded on the basis of UPSI. The burden is on him to show otherwise within the statutory defences, such as a non-genuine trade or the other circumstances the Regulations allow.
Conclude with consequences: unless Karan rebuts the presumption, SEBI may take action including penalties and directions against both. The company should review its code of conduct and database controls.

Answer: Sunil wrongfully communicated UPSI. Karan, an insider because he held UPSI, traded before it became public, so he is presumed to have traded on the basis of UPSI. He must prove a statutory defence to escape liability. Unless he does, SEBI can act against both, and Beta Ltd should strengthen its UPSI controls.

Exam tips

In Paper 6, expect one case to combine regulations. Label each part of your answer with LODR, SAST or PIT so the examiner sees the structure.
In MCQs, check the exact threshold and the exact condition. Options often use 25% or 5% in the wrong context.
Show the arithmetic for SAST holdings, even for one-mark parts. It protects marks if your conclusion differs.
The paper is open book, but time is short. Prepare a one-page sheet of thresholds and time limits to find quickly, and do not copy long passages in answers.
Always end with the consequence or action, such as an open offer, a disclosure within a time limit, or a trading restriction.

Practice questions from Corporate and Economic Laws

SEBI LODR, Takeover and Insider Trading Regulations in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

CS ExecutiveSEBI LODR Regulations 2015: Scope and Applicability

SEBI LODR, Takeover and Insider Trading Regulations: frequently asked questions

What is the difference between SAST and PIT regulations?

SAST governs the acquisition of shares and control of a listed company and requires an open offer on crossing set limits. PIT prohibits trading or communication based on unpublished price sensitive information. SAST is triggered by holdings, while PIT is triggered by information.

When is an open offer triggered under the SEBI Takeover Code?

An open offer is triggered when an acquirer, with persons acting in concert, would hold 25% or more of voting rights, or acquires control. A holder at 25% or more can creep up by 5% per financial year without an open offer, within the limit on non-public shareholding.

What is UPSI under the insider trading regulations?

UPSI is information that is not generally available and is likely to materially affect the price of securities once it becomes public. Examples include financial results, dividends, mergers and changes in capital structure. Insiders cannot trade while holding it.

How much of LODR do I need for CA Final IBS?

Focus on board and committee composition, time limits for results and disclosures, related party transactions and material event disclosure. Learn the rule and its number together so you can apply it to a case quickly.