It refers to the practice of purchasing or selling or dealing a publicly-traded company’s securities by a director, officer and employee of the company or any other person, having knowledge of unpublished price sensitive information which is not yet public information. This material information may result in a substantial impact on the decision of an investor regarding whether to purchase or sell securities.
Trading: Trading means and contains subscribing, buying, selling, dealing, or approving to subscribe, buy, sell, deal in any securities, and trade shall be interpreted accordingly.
Unpublished Price Sensitive Information: any sensitive information or facts, relating to a company or its securities may be directly or indirectly means and that is not usually accessible which upon becoming usually accessible, is probable to have material effects on the rate of the securities and shall, ordinarily including but not restricted to, information relating to the following –
The duties of the compliance officer include closure of the trading window prior to key announcements, during which period employees are prohibited from trading in securities of the company. The key question for SEBI’s consideration was the extent to which the compliance officer must be deferential to the board. Who are eligible for the role of Compliance Officer:
Further, not only Directors, employees or officers of the company are held liable for insider trading but “Connected person” are also held liable against the same.
It has two categories as under:
Actually Connected Person: Any person who is or has during the 6 months preceding to concerned act been allied with a company by directly or indirectly means and in any capacity including:
that allows such a person may be thorough directly or indirectly means access to unpublished price sensitive information or is equitably anticipated to allow such access.
Deemed Connected Person: Following categories shall be deemed to be connected persons unless the contrary is established-
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