The Regulations prohibit dealing, communicating or counseling on matters relating to insider trading.
As per the Regulations, no insider shall:
(i) either on his own behalf or on behalf of any other person, deal in securities of a company listed on any stock exchange when in possession of any unpublished price sensitive information; or
ADVERTISEMENTS:
(it) communicate or counsel or procure directly or indirectly any unpublished price sensitive information to any person who while in possession of such unpublished price sensitive information shall not deal in securities.
No company shall deal in the securities of another company or associate of that other company while in possession of any unpublished price sensitive information.
Image Source: fortifiedhealthsolutions.com
Any insider (including company) who deals in securities in contravention of the provisions of regulation shall be guilty of insider trading.
“Insider” means any person who:
ADVERTISEMENTS:
(i) Is or was connected with the company or is deemed to have been connected with the company and is reasonably expected to have access to unpublished price sensitive information in respect of securities of company, or
(ii) Has received or has had access to such unpublished price sensitive information.
“Connected person” means any person who:
(i) Is a director of a company, or is deemed to be a director of that company; or
(ii) Occupies the position as an officer or an employee of the company or holds a position involving a professional or business relationship between himself and the company whether temporary or permanent and who may reasonably be expected to have an access to unpublished price sensitive information in relation to that company:
ADVERTISEMENTS:
“Person is deemed to be a connected person”, if such person—
(i) Is a company under the same management or group, or any subsidiary company thereof?
(ii) Is an intermediary as specified in section 12 of the Act, Investment company, Trustee Company, Asset Management Company or an employee or director thereof or an official of a stock exchange or of clearing house or corporation;
(iii) Is a merchant banker, share transfer agent, registrar to an issue, debenture trustee, broker, portfolio manager, Investment Advisor, sub-broker, Investment Company or an employee thereof, or is member of the Board of Trustees of a mutual fund or a member of the Board of Directors of the Asset Management Company of a mutual fund or is an employee thereof who have a fiduciary relationship with the company;
(iv) Is a member of the Board of Directors or an employee of a public financial institution: or
(v) Is an official or an employee of a self-regulatory organisation recognised or authorised by the Board of a regulatory body; or
(vi) Is a relative of any of the aforementioned persons;
(vii) Is a banker of the company; or
(viii) Relatives of the connected person; or
(ix) Is a concern, firm, trust, Hindu undivided family, company or association of persons wherein any of the connected persons have more than 10 per cent of the holding or interest?
“Dealing in securities” means an act of subscribing, buying, selling or agreeing to subscribe, buy, sell or deal in any securities by any person either as principal or agent.
“Price sensitive information” means any information which relates directly or indirectly to a company and which if published is likely to materially affect the price of securities of company.
The following shall be deemed to be price sensitive information:
(i) Periodical financial results of the company;
(ii) Intended declaration of dividends (both interim and final);
(iii) Issue of securities or buy-back of securities;
(iv) Any major expansion plans or execution of new projects;
(v) Amalgamation, mergers or takeovers;
(vi) Disposal of the whole or substantial part of the undertaking;
(vii) And significant changes in policies, plans or operations of the company.