195. Prohibition on insider trading of securities.— (1) No person including any director or key
managerial personnel of a company shall enter into insider trading:
Provided that nothing contained in this sub-section shall apply to any communication required in the
ordinary course of business or profession or employment or under any law.
Explanation.—For the purposes of this section,—
(a) ―insider trading‖ means—
(i) an act of subscribing, buying, selling, dealing or agreeing to subscribe, buy, sell or deal in
any securities by any director or key managerial personnel or any other officer of a company
either as principal or agent if such director or key managerial personnel or any other officer of the
company is reasonably expected to have access to any non-public price sensitive information in
respect of securities of company; or
(ii) an act of counselling about procuring or communicating directly or indirectly any non-
public price-sensitive information to any person;
(b) ―price-sensitive information‖ means any information which relates, directly or indirectly, to a
company and which if published is likely to materially affect the price of securities of the company.
(2) If any person contravenes the provisions of this section, he shall be punishable with imprisonment
for a term which may extend to five years or with fine which shall not be less than five lakh rupees but
which may extend to twenty-five crore rupees or three times the amount of profits made out of insider
trading, whichever is higher, or with both.
CHAPTER XIII
APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL
