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CS Executive · Capital Market and Securities Laws · Prohibition of Insider Trading

Meera, a director of a listed company, advises her brother to buy shares of the company shortly before an undisclosed profit warning is made public, though she does not trade herself. Which limb of section 15G of the SEBI Act, 1992 is most directly attracted?

The counselling or procuring limb applies. Section 15G penalises an insider who counsels or procures any other person to deal in securities of a body corporate on the basis of unpublished price sensitive information, even if the insider does not trade personally.

  1. ACounselling or procuring another person to deal in securities on the basis of UPSICorrect
  2. BDealing on her own behalf on the basis of UPSI
  3. COmission of the Director Identification Number
  4. DForming an association exceeding the prescribed number of persons

Explanation

Section 15G(iii) covers an insider who counsels or procures another person to deal in securities on the basis of UPSI. Meera did not trade herself, so the own-dealing limb is not the direct fit. The other options relate to unrelated Companies Act provisions.

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