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

Section 12A of the SEBI Act, 1992 prohibits dealing in securities while in possession of material or non-public information. Which statement correctly reflects the scope of Section 12A(e)?

Section 12A(e) prohibits both dealing in securities while in possession of material or non-public information and communicating that information to any other person, in contravention of the SEBI Act, rules or regulations. It is not confined to directors, and Companies Act section 195 has been omitted.

  1. AIt bars only dealing, and communication of such information is dealt with only in the Companies Act, 2013
  2. BIt bars dealing while in possession of such information and also communicating it to any other person, in contravention of the Act, rules or regulationsCorrect
  3. CIt applies only to persons who are directors or key managerial personnel
  4. DIt applies to both listed and unlisted securities equally

Explanation

Section 12A(e) bars dealing in securities while in possession of material or non-public information, and communicating it to any other person, in contravention of the Act, rules or regulations. Companies Act sections 194 and 195 were omitted w.e.f. 9-2-2018, so that Act no longer deals with it. It is not limited to directors.

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