Quick Reference Guide about Insider Trading


Legal Provision:- Section 195 of Companies Act, 2013. SEBI (Prohibition of Insider Trading) Regulations, 2015.

Key Points:-

1. Insider Trading means "Unpublished Price Sensitive Information".

2. It's absolutely illegal.

3. Insider Trading affects the the Price of Securities of the Company.

4. It is not apply in ordinary course of business or profession or employment.

5. It includes activities like buying, selling, dealing of Securities by Director or KMP or any other officer of the Company on the basis of Unpublished Price Sensitive Information.

6. Penalty as per Section 195(2) of Companies Act, 2013 :-

The person is punishable for imprisonment of a term which may extend to 5 years or with fine which shall not be less than ₹ 5 lakh but which may extend to ₹25 crore or 3 times of amount of profit made from Insider Trading, whichever is higher or both.

7. Insider Trading also includes an act of Counselling about Price Prediction whether directly or Indirectly to any person.

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