Skip to content

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

Section 12A of the SEBI Act, 1992 prohibits certain acts by any person, directly or indirectly. Which of the following is expressly prohibited by this section in relation to securities of a listed company?

Section 12A of the SEBI Act prohibits dealing in securities while in possession of material or non-public information, or communicating it, in contravention of the Act, rules or regulations. The other choices come from Companies Act provisions on buy-back, employee loans and striking off, not Section 12A.

  1. ADealing in securities while in possession of material or non-public information in contravention of the Act, rules or regulationsCorrect
  2. BBuying own shares by a company without reducing share capital
  3. CGiving loans by a company to employees up to six months' salary for buying shares
  4. DApplying to the Registrar for striking off a company's name

Explanation

Section 12A(e) prohibits dealing in securities while in possession of material or non-public information, or communicating such information, in contravention of the Act or regulations. The other options relate to Sections 67 and 248-249 of the Companies Act and are not prohibitions under Section 12A.

Did you get it right without looking?

One question tells you little. A timed set on Prohibition of Insider Trading shows your real accuracy, how long you take and where you lose marks.

Practise Prohibition of Insider TradingFree diagnostic mock

More Prohibition of Insider Trading questions