A Critical Study of Confidentiality Obligations and Insider Trading Risks in Mergers and Acquisitions Transactions in India

M&A transactions involve the exchange of significant proprietary and unpublished price sensitive information among transaction parties, advisers and intermediaries. India’s laws and regulations regarding confidentiality and insider trading in M&A deals have been drastically reformed based on the SEBI (Prohibition of Insider Trading) Regulations 2015. This paper discusses the regulations pertaining to confidentiality obligations and insider trading risks in Indian M&A transactions, specifically under the SEBI Act, 1992, the SEBI (Prohibition of Insider Trading) Regulations, 2015, the Companies Act, 2013 and the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011. This study adopts doctrinal and analytical and investigates the existence and nature of legal uncertainties, obstacles to enforcement and compliance gaps, such as with regard to due diligence, disclosure of unpublished price sensitive information, digital surveillance, cross-border enforcement and confidentiality agreements. The paper identifies the areas of structural weaknesses in the present regulatory framework and makes several practical suggestions to enhance regulatory compliance, market integrity and reduce insider trading risks in the M&A transactions in India.