Insider Trading in India - Regulations

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SECURITIES AND EXCHANGE BOARD OF INDIA (1[PROHIBITION OF] INSIDER TRADING) REGULATIONS, 1992 In exercise of the powers conferred by section 30 of the Securities and Exchange Board of India Act, 1992 (15 of 1992), the Board, with the previous approval of the Central Government, hereby makes the following regulations, namely:— CHAPTER I PRELIMINARY Short title and commencement. 1. (1) These regulations may be called the Securities and Exchange Board of India (2[Prohibition of] Insider Trading) Regulations, 1992. (2) These regulations shall come into force on the date of their publication in the Official 3Gazette. Definitions. 2. In these regulations, unless the context otherwise requires:— (a) “Act” means the Securities and Exchange Board of India Act, 1992 (15 of 1992); (b) “body corporate” means a body corporate as defined in section 2 of the Companies Act, 1956 (1 of 1956); (c) “connected person” means any person who— (i) is a director, as defined in clause (13) of section 2 of the Companies Act, 1956 (1 of 1956), of a company, or is deemed to be a director of that company by virtue of sub-clause (10) of section 307 of that Act; 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himself and the company 4[whether temporary or permanent] and who may reasonably be expected to have an access to unpublished price sensitive information in relation to that company. 5 [Explanation :— For the purpose of clause (c), the words “connected person” shall 6[mean] any person who is a connected person six months prior to an act of insider trading;] (d) “dealing in securities” means an act of 7[subscribing,] buying, selling or agreeing to 8 [subscribe,] buy, sell or deal in any securities by any person either as principal or agent; Inserted by the SEBI (Insider Trading) (Amendment) Regulations, 2002,w.e.f. 20.02.2002. ibid. 3 19.11.1992. 4 ibid. 5 ibid. 6 Substituted for “include” by the SEBI (Prohibition of Insider Trading) (Second Amendment) Regulations, 2002, w.e.f. 29.11.2002. 2 1

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(e) “insider” means any person who, is or was connected with the company or is deemed to have been connected with the company, and who is reasonably expected to have access 9[***] to unpublished price sensitive information in respect of securities of 10[a] company, or who has received or has had access to such unpublished price sensitive information; (f) “investigating authority” means any officer of the Board or any other person, not being a firm, body corporate or an association of persons, having experience in dealing with the problems relating to the securities market and who is authorised by the Board under Chapter III; (g) “officer of a company” means any person as defined in clause (30) of section 2 of the Companies Act, 1956 (1 of 1956) including an auditor of the company; (h) “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 within the meaning of sub-section (1B) of section 370, or sub-section (11) of section 372, of the Companies Act, 1956 (1 of 1956), or sub-clause (g) of section 2 of the Monopolies and Restrictive Trade Practices Act, 1969 (54 of 1969), as the case may be; 11 [(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 a 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 has a fiduciary relationship with the company; (iv) is a Member of the Board...
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