What foreign investors need to know about insider trading

Foreign investors should begin to be careful regarding the new provision that has been introduced by the Companies Act 2013. This fresh provision relates to the concept of insider training. This concept used to be dealt under a different regulation run by the Securities and Exchange Board of India. As per the rules laid down under the domain of the 2013 Act, the fresh provision prohibits any director or personnel of a certain company from indulging in any kind of insider trading at any level. The broad terminology comprises of several activities like sales-purchase, subscription or deals in securities. In addition to that, there is also a prohibition on procuring or communicating price sensitive information which is of a non public nature. The CA2013 provision prescribes communication of unpublished price sensitive information in a carved out manner. In other words, the details are described in a very systematic way related to the communication aspect. The term “insider trading” has been defined quite differently from those in a specific regulation. Also, unlike the previous regulations, the provision extends to public unlisted companies as well. Understanding these concepts in detail would surely act as the best way
of understanding the related clauses of the Act.