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Section 195 of the Companies Act 2013: Prohibition on Insider Trading of Securities

SECTION-195 (Prohibition on insider trading of securities) under CHAPTER-XII (Meeting of Board and its Powers) of the Companies Act, 2013

1) No person including any director or key managerial personnel of a company shall enter into insider trading:

Provided that nothing contained in this sub-section shall apply to any communication required in the ordinary course of business or profession or employment or under any law.


Explanation.—For the purposes of this section,—
(a) “insider trading” means—
(i) an act of subscribing, buying, selling, dealing or agreeing to subscribe, buy, sell or deal in any securities by any director or key managerial personnel or any other officer of a company either as principal or agent if such director or key managerial personnel or any other officer of the company is reasonably expected to have access to any non-public price sensitive information in respect of securities of company; or 
(ii) an act of counselling about procuring or communicating directly or indirectly any non-public price-sensitive information to any person;
(b) “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 the company.
(2) If any person contravenes the provisions of this section, he shall be punishable with imprisonment for a term which may extend to five years or with fine which shall not be less than five lakh rupees but which may extend to twenty-five crore rupees or three times the amount of profits made out of insider trading, whichever is higher, or with both.





Extra Notes for Readers

(1) The Companies Act, 2013 received the assent of the President on the 29th August, 2013 (Published in the Gazette of India, Extraordinary, Part II - Section 1 by Ministry of Law and Justice, Legislative Department on 30th August, 2013) - link


(2) Section 195 of the Companies Act 2013 was notified by MCA Notification S.O. 2754(E) dated 12th September 2013 (w.e.f. 12th September 2013) - link

(3) Further, refer the Companies (Meeting of Board and its PowersRules, 2014 (w.e.f. 1st April, 2014) - link
[Also check amendments, if any, to the Companies (Meeting of Board and its Powers) Rules, 2014]







This page was last updated on 13th April, 2017.

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