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

Which statement about the Companies Act, 2013 provisions on insider dealing is correct according to the official text?

Section 195 of the Companies Act, 2013, which prohibited insider trading, was omitted with effect from 9 February 2018. Section 194 on forward dealings was omitted as well. Insider trading is now addressed through the SEBI Act, 1992, notably Sections 12A and 15G.

  1. ASection 195 on prohibition of insider trading was omitted with effect from 9-2-2018Correct
  2. BSection 195 remains in force and is the main penalty provision
  3. CSection 194 on forward dealings by directors was extended to all employees
  4. DSection 195 was substituted by Section 15G of the SEBI Act

Explanation

The text shows Section 195 (prohibition on insider trading) and Section 194 (forward dealings by director or KMP) were omitted w.e.f. 9-2-2018 by the Companies (Amendment) Act, 2017. Insider trading is thus governed by the SEBI Act, Section 12A and Section 15G.

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