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

Meera, a director of a listed company, wants to know whether the Companies Act, 2013 currently contains its own section prohibiting insider trading (earlier Section 195). Which statement is correct as per the official text?

Section 195 of the Companies Act, 2013 was omitted with effect from 9 February 2018. The insider trading prohibition now rests in the SEBI Act, 1992 (Section 12A) and the regulations made under it, not in the Companies Act.

  1. ASection 195 was omitted with effect from 9 February 2018, so the insider trading prohibition is found in the SEBI Act, 1992 and SEBI regulationsCorrect
  2. BSection 195 continues in force and is the primary insider trading provision for listed companies
  3. CSection 195 now applies only to unlisted public companies
  4. DSection 195 was replaced by Section 133 of the Companies Act, 2013

Explanation

The official text shows Section 195 of the Companies Act, 2013 as omitted w.e.f. 9-2-2018. The prohibition on insider trading sits in Section 12A of the SEBI Act, 1992 (read with SEBI regulations). Section 133 deals with accounting standards, not insider trading.

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