Sources in the know said the new rules would be far more stringent than the regulations currently in place but not as strict as those mentioned in the draft document circulated in December last year.

For example, in the definition of “connected persons”, public servants might not be specifically mentioned as insiders. Also, disclosing due-diligence procedures by companies to stock exchanges might not be part of the regulations.

“In the final guidelines, the market regulator has taken into consideration the feedback received from various intermediaries. Their concerns have been ironed out,” the sources said.

The insider trading norms will define connected persons on the basis of the duty they perform for a company and the legal relation they have with the listed entity and its promoters.

In the draft regulations formulated by the insider trading committee, led by judge N K Sodhi, a connected person was defined as someone connected with a company in any capacity (including people who had frequent communications with company officers) in the six months prior to the trade.

The draft regulations had made headlines for their inclusion of public servants in the definition of connected persons. But in the final guidelines, public servants and ministers might not find a specific mention.

“If public servant or the media act on any insider information, they will be examined. However, there would not be any specific provision to deal with them,” said a source.

In the draft regulations, any due-diligence that companies engaged in needed to be declared to stock exchanges two days before any trading activity was undertaken in the stock. But the final norms might not find mention of due-diligence aspects.

“Dealing with situations where there is no intent to conduct a mala fide transaction needs clarity. Just declaring due-diligence two days before trade does not solve the problem and is not practical,” said Raja Lahiri, partner, Grant Thornton.

However, there is another section of market that believes any form of price-sensitive information should be available to all types of investors. “The due-diligence aspect is the heart and soul of the regulations. Every investor has the right to access the information, whether positive or negative, about a company” said J N Gupta, chief executive officer, SES proxy advisors.

In December last year, the prohibition of insider trading (PIT) committee had given its report to the market regulator. Sebi later invited comments on the draft regulations.

So far, the market had been operating under the PIT regulations of 1992.

Legal experts say persons with fiduciary duty to shareholders are supposed to put shareholders’ interest ahead of their own and, thus, should be labelled as insiders.

Gupta says it is difficult to pinpoint an insider and charge him or her for it. “Before charging an insider, it needs to be proved without a doubt that the person has acted on unpublished price-sensitive information,” said Gupta.

Sebi is also thinking about introducing a “trade plan” for companies that want to deal in their own shares. Under the plan, companies and promoters will be required to declare their intent of trading in their own shares and mandatorily conduct such trades six months later.

Experts say trade plan will aid in removing the hassles companies earlier faced in trading in their securities.

“India currently needs a mature structured way of trading as suggested in the trade plan. And, we believe a six-month time is a reasonable cool-off period for companies to execute trades in their own scrips,” said Lahiri.