A promoter of KJMC Financial Services Limited (‘KJMC’) transferred equity shares of KJMC by way of gift to his wife (‘Transfer’), which: (i) did not result in a change in the promoter shareholding; (ii) was without any consideration between immediate relatives; and (iii) complied with reporting requirements under the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 and SEBI (Prohibition of Insider Trading) Regulations, 2015. KJMC has, by way of an interpretative letter, sought certain clarifications in relation to Regulation 72(2) of the SEBI (Issue of Capital and Disclosure Requirements), 2009 (‘ICDR Regulations’), which prohibits making a preferential issue to any person, including the promoter and promoter group, who have sold equity shares of such issuer during the six months preceding the relevant date. KJMC contended that the Transfer did not amount to a ‘sale’ under Section 4 of the Sale of Goods Act, 1930, which mandated that any sale or purchase should be done in lieu of a monetary consideration and therefore Regulation 72(2) of the ICDR Regulations will not be applicable. SEBI did not agree with KJMC’s analysis and referred to its Informal Guidance in the matter of Strides Arcolab Limited, where it was clarified that ‘any person’ would include persons who had made inter-se transfers within the promoter group. SEBI clarified that the primary intention of Regulation 72 was not with respect to consideration but with respect to ‘change in ownership of equity shares’, and consequently the inter-se transfer by way of gift would be considered a ‘sale’ as per Regulation 72(2) and the promoter(s) and promoter group ineligible for allotment of specified securities on a preferential basis.