195. Prohibition on insider trading of securities
(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.