SEBI Daughters-in-Law as ‘Relatives’ Under Takeover Code: Proposed Amendment Analysis

Executive Summary

India’s corporate governance framework faces a critical definitional asymmetry that directly impacts family-controlled listed companies, promoter succession planning, and the structural efficacy of private family trusts—particularly regarding the unresolved question of whether a daughter-in-law can be treated as a relatives under the SEBI Takeover Code. Under Regulation 2(1)(l) of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 — commonly known as the SEBI Takeover Code or SAST Regulations — the definition of ‘immediate relative’ is confined to spouses, parents, siblings, and children. Daughters-in-law (and sons-in-law) are explicitly excluded. This exclusion creates a profound legal paradox: SEBI aggressively treats daughters-in-law as family members under the Persons Acting in Concert (PAC) framework to impose strict penal liability for disclosure lapses, while simultaneously denying them the status of ‘immediate relative’ when promoter families seek safe-harbor exemptions for transparent trust-based succession planning.

The Regulatory Paradox: ‘When it comes to punishing you for insider trading, your daughter-in-law is family; but when it comes to granting you an exemption for succession planning, she is a stranger.’ — Industry practitioners’ critique of SEBI’s inconsistent definitional framework.

This analysis examines the legislative architecture of the SAST Regulations, dissects the statutory asymmetry across Indian corporate and fiscal statutes, evaluates landmark judicial precedents, and assesses proposed reforms. It concludes that recognizing daughters-in-law as ‘relatives’ under the SEBI Takeover Code — supported by appropriate disclosure safeguards — is necessary, legally sound, and essential for modern Indian corporate governance.

 

Key Findings at a Glance 1.    Four major Indian statutes — Companies Act 2013, Income Tax Act 1961, SEBI PIT Regulations 2015 (amended Dec 2024) — explicitly recognize daughters-in-law as relatives. The SAST Regulations stand alone in their exclusion. 2.    The PAC Paradox: SEBI aggregates daughters-in-law into promoter groups for enforcement purposes but excludes them from protective exemptions — an irreconcilable regulatory contradiction. 3.    Akshar Spintex Ltd. (Dec 2024 Adjudication Order) exemplifies the penal asymmetry: promoters penalized for disclosure failure when gifting shares to daughter-in-law, despite the transfer being a bona fide family arrangement. 4.    The Supreme Court’s Balram Garg v. SEBI (2022) judgment demands concrete ‘foundational facts’ before weaponizing family ties — supporting context-specific, reality-driven approaches. 5.    Three reform pathways exist: statutory cross-reference to Companies Act 2013; trust-specific safe harbor under Regulation 10; and enhanced disclosure mechanisms.

I. Introduction: Corporate Control, Familial Evolution & Statutory Rigidity

The foundational bedrock of the Indian corporate economy remains the family-controlled enterprise. The structural evolution of India’s corporate landscape is inextricably linked to the metamorphosis of the traditional Hindu Undivided Family (HUF) into complex, multi-jurisdictional, and publicly listed conglomerates. As these family enterprises transitioned into public markets, the seamless continuity of the promoter family’s control became subject to intense regulatory scrutiny, creating enduring friction between the fluid realities of familial succession and the rigid textual boundaries of corporate law.

To insulate enterprises from succession-induced volatility, fractionalization of voting rights, and intra-family disputes, promoter groups have increasingly adopted Private Family Trusts. These sophisticated vehicles allow families to ring-fence ownership, ensure unified voting control, and construct a resilient generational framework — while maintaining the concentrated promoter holding that markets rely upon for strategic continuity.

However, these succession vehicles are critically undermined by an archaic statutory definition within India’s primary market regulation: the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (SAST Regulations or the Takeover Code). Specifically, Regulation 2(1)(l) defines ‘immediate relative’ in a manner that conspicuously excludes the daughter-in-law — and the son-in-law — generating a compliance crisis for family-controlled listed entities.

SEBI’s Takeover Code defines ‘immediate relative’ under Regulation 2(1)(l) as: ‘…any spouse of that person, and includes parent, brother, sister, or child of such person or of the spouse.’ The daughter-in-law does not appear anywhere in this definition — despite her explicit recognition in four other Indian legal statutes.

Any transfer of shares — or the delegation of fiduciary control via trusteeship to a daughter-in-law — is treated under the strict letter of the SAST Regulations as a transfer to an unrelated third party, potentially triggering mandatory open offer obligations and severe compliance burdens. This analysis examines the full scope of this regulatory anomaly: its legislative origins, its paradoxical enforcement, its judicial treatment, and the pathway to necessary reform.

II. Statutory Anatomy of the Takeover Code & The Succession Bottleneck

A. The TRAC Genesis and Philosophy of Control

The current iteration of the SAST Regulations was fundamentally overhauled and notified in 2011, replacing the 1997 regime. This overhaul was predicated on the exhaustive recommendations of the Takeover Regulations Advisory Committee (TRAC), chaired by Mr. C. Achuthan, former Presiding Officer of the Securities Appellate Tribunal (SAT). The TRAC mandate was to align Indian acquisition norms with global M&A practices while strengthening the protective framework for retail investors.

The TRAC report altered thresholds for mandatory open offers. The core philosophy: any entity acquiring a substantial block of voting rights, or acquiring de facto or de jure control over a listed entity, must offer existing public shareholders an exit opportunity at a price equal to or higher than the acquisition price. This equality of opportunity prevents stealth takeovers and back-door accumulation of control without compensating dispersed minority shareholders.

B. Twin Triggers of Substantial Acquisition

Quantitative Trigger — Regulation 3: An initial open offer is triggered if an acquirer, together with Persons Acting in Concert (PAC), acquires shares or voting rights entitling them to exercise 25% or more of the voting capital of a target company. The ‘creeping acquisition’ limit further restricts those already holding between 25% and 75% from acquiring more than 5% in any single financial year.

Qualitative Trigger — Regulation 4: Irrespective of numerical shareholding, Regulation 4 mandates a compulsory open offer if an acquirer directly or indirectly acquires ‘control’ over the target company. Control is expansively defined under Regulation 2(1)(e) to include the right to appoint a majority of directors, or to control management or policy decisions — exercisable individually or in concert, directly or indirectly.

C. Regulation 10 Exemption: Intra-Family Safe Harbors

The architects of the Takeover Code recognized that applying rigorous open offer obligations to genuine internal family reorganizations would be commercially disastrous. When a promoter transfers shares to their child, or when a family settles equity into a private trust, the ultimate beneficial ownership and management trajectory of the listed entity do not experience a paradigm shift. Chapter II, Regulation 10(1)(a), therefore automatically exempts acquisitions pursuant to inter se transfers amongst qualifying persons — primarily ‘immediate relatives.’

In 2017, SEBI issued a master circular outlining a streamlined approval process for family trusts, permitting transfers without triggering open-offer obligations — provided trustees and beneficiaries exclusively comprised ‘immediate relatives’ as defined under Regulation 2(1)(l). It is precisely here that the definitional rigidity creates a formidable bottleneck.

D. The Daughter-in-Law Bottleneck: Recognition Among Relatives Under the SEBI Takeover Code

In modern family conglomerates, daughters-in-law frequently exercise significant fiduciary, operational, and strategic responsibilities. A patriarch seeking to settle shares into a trust for the benefit of minor grandchildren would naturally appoint his daughter-in-law — the mother of the beneficiaries and a vested stakeholder in the family’s legacy — as trustee. Yet because she falls outside Regulation 2(1)(l), she is a statutory outsider.

Practical Impact: The family is forced to abandon the automatic exemption route and file a formal application under Regulation 11 of the Takeover Code, seeking a specific, case-by-case exemption from SEBI’s regulatory panel. This process is arduous, commercially disruptive, expensive, and subjects internal succession mechanics to prolonged regulatory uncertainty — despite ultimate control remaining resolutely within the family.

III. Statutory Asymmetry: Fragmented Definition of ‘Relative’ in Indian Law

The exclusion of the daughter-in-law as a relative under the SEBI Takeover Code is not an isolated legal quirk — it is the epicenter of a regulatory anomaly resulting from uncoordinated legislative drafting across Indian corporate, fiscal, and securities statutes. The following table illustrates the profound divergence:

The Dissonance: A Split-Personality Regulator

The dissonance in the table above is not merely academic; it has severe practical ramifications. Under the Companies Act, the Ministry of Corporate Affairs acknowledges that a daughter-in-law wields enough influence to compromise the independence of a transaction — mandating strict Related Party Transaction (RPT) disclosures. Under the Income Tax Act, the Ministry of Finance recognizes that a gift to a daughter-in-law is an internal shifting of family wealth, not a taxable commercial transfer.

Most paradoxically, SEBI itself operates with a split personality. The December 2024 amendments to the Prohibition of Insider Trading (PIT) Regulations deliberately widened the dragnet of ‘connected persons’ specifically to capture daughters-in-law, based on the rationale that extended family members have access to inside information. Yet when the very same promoter family approaches SEBI under the SAST Regulations to organize a transparent succession plan — a process that promotes long-term stability and benefits minority shareholders — SEBI reverts to a hyper-literal, restrictive reading of the 2011 text, denying the familial bond.

This lack of harmonization places listed entities in impossible compliance situations. Companies drafting unified internal codes of conduct must track daughters-in-law as designated persons under PIT, while simultaneously treating those same individuals as third parties for promoter group disclosures and inter-se transfer mechanisms under the SAST Regulations. The NOCIL Limited informal guidance application to SEBI exemplifies this compliance whiplash in practice.

IV. The ‘Persons Acting in Concert’ (PAC) Paradox

The legal fiction of ‘Persons Acting in Concert’ is the most potent weapon in SEBI’s enforcement arsenal. Regulation 2(1)(q) defines PACs as persons who, with a common objective or purpose of acquiring shares or voting rights or control, cooperate through an agreement or understanding — formal or informal, direct or indirect.

Regulation 2(1)(q)(2) establishes irrefutable presumptions: certain categories of persons are automatically ‘deemed’ to be acting in concert unless the contrary is established by highly compelling evidence. Critically, promoters and members of the promoter group are deemed to be PACs. This is where the paradox crystallizes:

A. Akshar Spintex Ltd.: The PAC Paradox in Action

The adjudication order in the matter of Akshar Spintex Ltd. (Order No. Order/AN/PR/2024-25/30725-30733, December 2024) serves as the definitive case study. On December 6, 2022, promoter entities Nayan Vallabhbhai Gadhiya and Kantaben Vallabhbhai Gadhiya executed a gift deed transferring 8,50,000 equity shares to Charmee Nayan Gadhiya — wife of Nayan and daughter-in-law of Kantaben.

Because the daughter-in-law fell outside the strict SAST definition of ‘immediate relative,’ she was not formally classified as a member of the promoter group in the company’s disclosures. When shares were gifted to her, the transaction was logged as a transfer out of the promoter group, resulting in a 3.4% aggregate decrease in collective PAC shareholding — triggering mandatory disclosure requirements under Regulation 29(2) read with 29(3).

The promoters argued the lapse was a technicality: a bona fide family gift devoid of monetary consideration, with information available in the public domain via System Driven Disclosures. The SEBI Adjudicating Officer emphatically rejected this defense. Relying on SEBI v. Shriram Mutual Fund, the AO reiterated that penalty is attracted the moment a statutory contravention is established — intention or lack of ill motive is wholly irrelevant. A monetary penalty was levied on the entire promoter group.

B. Jurisprudential Consistency in Enforcement

The Akshar Spintex order is not an outlier. In Rama Steel Tubes Limited before the SAT, SEBI scrutinized the conduct of Ms. Hannya Dhir, daughter-in-law of a key entity, who resigned from her Non-Executive Directorship immediately prior to a preferential allotment — alleged to be a calculated maneuver to sever the formal corporate link and avoid PAC aggregation. In Grob Tea Co., SEBI pierced the veil of separate demat accounts, explicitly including acquisitions by daughters-in-law Smt. Ritu Mittal and Smt. Kavita Bhuwalka in the PAC aggregate, utilizing common addresses and family fund flows to establish concerted action.

The Jurisprudential Paradox: SEBI utilizes the familial relationship of the daughter-in-law to establish ‘commonality of purpose’ under the PAC framework for penal enforcement — while relying on the exclusionary definition of Regulation 2(1)(l) to deny the daughter-in-law trustee status for transparent succession planning. The regulator cannot blow hot and cold.

V. Landmark Judicial Precedents: Balram Garg v. SEBI (2022)

The intersection of family relationships, evidentiary burdens, and securities law enforcement was brought into sharp relief by the Supreme Court of India in Balram Garg v. Securities and Exchange Board of India (Civil Appeal No. 7054 of 2021, decided April 19, 2022). Though primarily dealing with PIT Regulations, its ratio decidendi has profound implications for how regulators must view familial definitions and presumptions of shared intent.

A. The PC Jeweller Dispute: Family Relationships as Evidence

SEBI alleged that Balram Garg, Managing Director of PC Jeweller Limited, unlawfully communicated Unpublished Price Sensitive Information (UPSI) regarding a proposed share buyback to his relatives. The accused ‘tippees’ included Mr. Sachin Gupta (nephew), Mrs. Shivani Gupta (wife of Sachin — a daughter-in-law of the broader promoter family), and Mr. Amit Garg (another nephew). SEBI’s Whole Time Member constructed a case based on circumstantial evidence: shared residential address, close familial ties, and trading in proximity to corporate events.

B. Supreme Court’s ‘Foundational Facts’ Doctrine

The Supreme Court, in a sweeping reversal of SAT and SEBI orders, systematically dismantled the regulator’s reliance on familial proximity as a substitute for hard evidence. The Court laid down three critical principles:

• Rejection of Guilt by Association:

An individual cannot be presumed to have shared or received UPSI solely based on being a relative or living in the same household. The existence of close family relationships, physical closeness, or shared residential proximity cannot — standing alone — be sufficient grounds to infer the communication of sensitive information or the formation of an illegal concert.

• Requirement of Foundational Facts:

To raise a legal presumption against ‘immediate relatives’ or extended family members such as a daughter-in-law, SEBI must definitively prove that relatives were ‘financially dependent’ on the insider, or that they actively ‘consulted’ the insider for their trading decisions. Without these foundational facts, the deeming fiction collapses.

• Breakdown of Ties:

The Court noted that accused members demonstrated a historical ‘breakdown of ties’ and physical separation from the Managing Director’s branch of the family, negating any automatic presumption of shared information. In the modern era, extended family units often operate with complete financial and strategic independence.

C. Implications for the SAST Regulations

While the Supreme Court demands strict, incontrovertible evidentiary proof of financial dependence to utilize family ties for penal action, SEBI’s SAST Regulations steadfastly refuse to acknowledge the legitimacy of those exact same family ties when a promoter proactively seeks a safe-harbor exemption. If a daughter-in-law is independent enough that the Supreme Court protects her from automatic insider trading presumptions, she is certainly capable of functioning as an independent fiduciary trustee for a family trust without triggering hostile takeover provisions.

The Balram Garg ruling highlights the absolute necessity for a context-specific, reality-driven approach to family relationships in corporate law — a philosophy that strongly supports the inclusion of daughters-in-law in the Takeover Code’s protective exemptions.

VI. Mechanics of Private Family Trusts & The Regulatory Bottleneck

A. The Strategic Rationale for Trust-Based Succession

In the past decade, Indian promoter families have aggressively pivoted toward trust structures as the preferred vehicle for generational wealth transfer and corporate governance continuity. Four primary motivations drive this structural shift:

• Consolidation of Voting Power:

By parking all family equity in a single trust, families ensure that voting rights are exercised as a unified block, preventing the fragmentation of control that naturally occurs when shares are distributed among dozens of heirs across multiple generations.

• Asset Protection and Ring-Fencing:

Trusts insulate the core corporate holding from personal exigencies, marital disputes, divorces, or individual bankruptcies of specific family members — ensuring the listed entity’s governance stability is decoupled from individual family member events.

• Tax and Estate Planning Optimization:

With persistent speculation about the reintroduction of estate duty in India, families have proactively structured holdings to optimize tax efficiencies and ensure smooth generational transitions with minimized compliance friction.

• Minority Shareholder Protection:

Paradoxically, well-structured family trusts actually benefit minority shareholders by preventing sudden leadership vacuums and ensuring strategic continuity under a clear, pre-defined governance framework.

B. The SEBI Exemption Mechanism and Its Structural Flaw

When a promoter transfers shares to a private trust, the legal title shifts from the individual promoter to the Trustees. Under a strict reading of Regulations 3 and 4, this constitutes an ‘acquisition’ by the trustees. SEBI’s 2017 Master Circular allows promoters to apply for exemption under Regulation 11, subject to three non-negotiable conditions:

1. The trust must be a mirror image of the promoter’s holding.
2. There must be no change in ultimate control or public shareholding.
3. The Trustees and Beneficiaries must ONLY be promoters or their ‘immediate relatives’ — as narrowly defined under Regulation 2(1)(l).

The third condition paralyzes succession planning. If a patriarch wishes to appoint his daughter-in-law as trustee — perhaps because his son is incapacitated, or to ensure she has fiduciary voice in managing the wealth her children will inherit — the application fails the automatic criteria. The family is forced into the costly Regulation 11 individual exemption process.

C. Landmark Exemption Cases: Predictable Outcomes, Avoidable Costs

In numerous precedents, SEBI has ultimately granted case-specific exemptions, implicitly acknowledging the absurdity of the rule. In PI Industries, Prince Pipes & Fittings, and Everest Kanto Cylinders, SEBI granted Regulation 11 exemptions for transfers to family trusts noting that ultimate control remained unchanged. In Shrinathji Trust (target: Shreyas Intermediates Ltd.), settlor Bal Krishna Shriya explicitly sought to include his daughter-in-law as a beneficiary — requiring the full Regulation 11 application process before obtaining an exemption SEBI was always going to grant.

In Refex Renewables & Infrastructure Limited (February 2026 Exemption Order), SEBI assessed a complex matrix of transfers where promoters sought to gift shares to grandsons and daughters-in-law, requiring multi-layered exemptions to be painstakingly justified. If the outcome of these applications is entirely predictable — SEBI invariably grants the exemption upon confirming a genuine family arrangement — then the regulatory friction added by the restrictive definition serves no constructive purpose.

The Efficiency Argument: When SEBI routinely grants Regulation 11 exemptions for daughters-in-law upon confirmation that the trust is a genuine family arrangement, the question is not whether the exemption should be granted — it is why families should be forced to endure months of regulatory uncertainty, substantial legal fees, and commercial disruption to obtain an outcome that was never genuinely in doubt.

VII. The Gender Dimension: Equity, Agency & Corporate Governance

Beyond the strictly legal mechanics of the SEBI Takeover Code, the exclusion of daughters-in-law as relatives raises profound questions concerning gender equity and the evolving role of women within Indian corporate governance. The definition of ‘immediate relative’ in the SAST Regulations is a relic of a bygone era, implicitly relying on outdated patriarchal assumptions regarding the distribution of power and fiduciary responsibility within the Indian family unit.

Historically, the structural integrity of the HUF placed decision-making authority and coparcenary rights in the hands of male lineal descendants. Daughters-in-law were structurally excluded from ownership and managerial control, viewed as passive participants in the economic life of the family. However, the modern Indian corporate landscape has undergone a radical paradigm shift.

A. Legislative Mandate for Gender Inclusion

The Companies Act, 2013, and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, revolutionized board compositions by mandating the appointment of female directors on boards of listed entities. While the overarching intent was to infuse boardrooms with independent gender diversity, the practical reality in family-run enterprises often resulted in the appointment of female family members — wives, daughters, and daughters-in-law — to the board. This legislative push undeniably integrated daughters-in-law into the formal, legally accountable governance structures of listed companies.

By actively excluding daughters-in-law from the definition of ‘relative’ for succession planning, the SEBI Takeover Code directly contradict this progressive legislative trajectory. Legal commentators and corporate governance experts note that this exclusion reinforces anachronistic stereotypes, effectively creating a regulatory glass ceiling.

B. The Fiduciary Agency Paradox

The State’s Contradiction: The SAST Regulations allow the State to demand that a daughter-in-law shoulder the immense regulatory liabilities of a corporate director, yet simultaneously bar her from stepping into the fiduciary role of a trustee to manage the very family wealth she helps generate and govern. This is constitutionally and morally indefensible in 2026.

In scenarios involving sudden succession crises — early mortality of male heirs, debilitating illness, or widowhood — the inability to swiftly appoint a competent daughter-in-law as trustee without triggering a hostile 25% open offer mandate places unjustified strain on enterprise continuity. The December 2024 PIT amendments themselves exemplify the evolving legislative consensus: SEBI has already widened the dragnet to recognize daughters-in-law as proximate family insiders. The Takeover Code must follow. The integration of the daughter-in-law into the protective exemptions of the SEBI Takeover Code is not merely a technical harmonization of statutes. It is a vital imperative for recognizing the equitable agency and fiduciary capacity of women in modern family business structures — consistent with India’s broader legislative trajectory toward gender equity in corporate governance.

VIII. Proposed Regulatory Reforms & Global Perspectives

In late 2025 and early 2026, the friction between the SAST Regulations and the realities of modern succession planning culminated in a high-level push by corporate India for definitive regulatory reform. A consortium of prominent business families and elite corporate law advisors formally petitioned SEBI to fundamentally overhaul the Takeover Code’s familial definitions.

A. Market Representations and Expert Advocacy

The core argument advanced by market participants is that the framework’s reliance on repeated case-specific Regulation 11 applications for standard trust setups is an unnecessary bureaucratic hurdle. Eminent legal practitioners have articulated the necessity for reform. Mr. Moin Ladha of Khaitan & Co. publicly stated that the definition ‘clearly needs a relook because in many family-owned listed companies, daughters-in-law are meaningfully involved in family governance and are often intended beneficiaries under family trusts.’ He emphasized that their exclusion in genuine non-commercial intra-family arrangements leads to ‘additional regulatory steps, avoidable uncertainty and extended timelines.’

The representations also advocate for modernization in SEBI’s view of family trust administration. Currently, SEBI guidelines actively discourage independent professional or institutional trustees alongside family members. Experts like Vishal Gada of Aurtus Consulting have noted that disallowing external professionals — especially when managing assets for minor beneficiaries — does not align with commercial realities or the evolving nature of sophisticated family offices.

B. Global Best Practices: The UK Takeover Panel

The UK Panel on Takeovers and Mergers, administering the City Code on Takeovers and Mergers, frequently updates its regulations to accommodate market realities without compromising minority protection. In February 2026, the UK Takeover Panel implemented substantive rule changes (via Response Statement 2025/1) to accommodate Dual Class Share Structures (DCSS) and to codify dispensation practices for IPOs and share buybacks under their mandatory offer regime.

International models in the UK and Singapore routinely treat family-related trusts as part of the unified promoter group. They do not place arbitrary bloodline restrictions on who can act as trustee, provided that the ultimate economic benefit and locus of family control remain anchored within the promoter group. SEBI must adopt a similarly principles-based, globally aligned approach.

C. Three Viable Reform Pathways

Pathway 1 — Statutory Cross-Reference (Recommended): The most elegant solution is amending Regulation 2(1)(l) of the SAST Regulations to substitute ‘immediate relative’ with a direct reference to the definition of ‘relative’ under Section 2(77) of the Companies Act, 2013. This single amendment would instantly expand the protective umbrella to include daughters-in-law, sons-in-law, and HUF members, ensuring absolute consistency across India’s primary corporate statutes.

Pathway 2 — Trust-Specific Safe Harbor: If SEBI is hesitant to globally expand the definition for all inter se transfers, it could carve out a ring-fenced exemption under Regulation 10 exclusively for Private Family Trusts. This safe harbor would explicitly permit the transfer of shares to a trust where daughters-in-law serve as trustees, subject to codified conditions: absence of commercial consideration, beneficiaries being lineal descendants, and the trust deed prohibiting transfer of voting control to third parties outside the promoter group.

Pathway 3 — Enhanced Disclosure Mechanisms: The inclusion of daughters-in-law could be coupled with enhanced, continuous disclosure mandates — requiring target companies to publish the foundational tenets of the trust deed, the identities of all trustees, and the operational mechanics of the family trust directly to the stock exchanges. This ensures total, ongoing transparency for retail and institutional investors regarding the true locus of corporate control.

Under SEBI Chairman Tuhin Kanta Pandey’s leadership, the Board is evaluating broader M&A reforms in 2026 — including proposals to mandate independent valuations for infrequently traded shares and expedite open offer timelines to 30 days. The daughter-in-law recognition reform should be integrated into this comprehensive legislative overhaul.

IX. Conclusion: Towards a Harmonized, Equitable Regulatory Framework

The current exclusion of the daughter-in-law from the definition of ‘immediate relative’ under the SEBI SAST Regulations 2011 stands as a glaring, indefensible anomaly in the modern Indian legal framework. The issue assumes particular significance in determining whether a daughter-in-law qualifies as a relative for the purposes of the SEBI Takeover Code. It creates an untenable paradigm where the securities regulator aggressively aggregates the daughter-in-law into the promoter group to penalize disclosure lapses under the strict liability doctrine of PAC, while simultaneously treating her as an absolute stranger to deny safe-harbor exemptions necessary for transparent, trust-based succession planning.

This asymmetry flatly contradicts the inclusive definitions enshrined within the Companies Act, 2013, and the Income Tax Act, 1961. It stands at stark odds with SEBI’s own recent expansive amendments to the PIT Regulations in December 2024. Furthermore, it reinforces archaic gender norms that fail to recognize the substantive fiduciary roles that women currently occupy in the governance of family-controlled enterprises.

As Indian corporate families increasingly rely on sophisticated trust structures to ensure generational continuity and insulate listed enterprises from succession volatility, the regulatory framework must evolve to support — rather than hinder — this professionalization of family wealth management. By enacting a carefully calibrated amendment recognizing the daughter-in-law as a relative — supported by stringent structural safeguards, continuous disclosure norms, and a principles-based approach to trust governance — SEBI can dismantle an unnecessary bureaucratic bottleneck.

Such reform will not compromise the sanctity of the mandatory open offer mechanism, nor will it dilute vital minority shareholder protection. Rather, it will facilitate seamless, legally sound succession planning — ensuring the long-term stability, strategic continuity, and sustainable growth of India’s foundational corporate institutions.

References

1 SEBI SAST Regulations, 2011 — Reg 2(1)(l), 2(1)(q), 3, 4, 10, 11www.sebi.gov.in/legal/regulations/oct-2011/securities-and-exchange-board-of-india-substantial-acquisition-of-shares-and-takeovers-regulations-2011_10933.html

2 TRAC Report (Achuthan Committee), 2010 — PIB Notificationwww.pib.gov.in/newsite/PrintRelease.aspx?relid=65400

3 Companies Act, 2013 — Section 2(77) r/w Rule 4 (MCA)ca2013.com/section-277-relative/

4 Income Tax Act, 1961 — Section 56(2)(x) — CBDT / MoFPrimary legislation — available on official statute database

5 SEBI PIT Regulations, 2015 as amended December 2024www.sebi.gov.in/legal/regulations/jan-2015/sebi-prohibition-of-insider-trading-regulations-2015_27508.html

6 Balram Garg v. SEBI — Civil Appeal No. 7054 of 2021 (SC, 19 April 2022)api.sci.gov.in/supremecourt/2021/26746/26746_2021_9_1501_35070_Judgement_19-Apr-2022.pdf

7 SEBI v. Shriram Mutual Fund — 68 SCL 216 (SC) — Strict LiabilityPrimary legislation — available on official statute database

8 Order in the matter of Rama Steel Tubes Limited — SATwww.casemine.com/judgement/in/6149a186342cca13b3206acb

9  Grob Tea Co. Adjudication Order — SEBIwww.sebi.gov.in/adjorder/grob.html

10 Akshar Spintex Ltd. — Order/AN/PR/2024-25/30725-30733 (Dec 2024)bsmedia.business-standard.com/_media/bs/data/announcements/bse/09122024/8782e50e-8e92-47e9-8953-ca888dcb61d1.pdf

11 Refex Renewables & Infrastructure Ltd. — WTM/KCV/CFD/21/2025-26 (Feb 2026)www.sebi.gov.in/sebi_data/attachdocs/feb-2026/exemption_order_refexren.pdf