INTRODUCTION:

The Securities and Exchange Board of India (SEBI), in its endeavor to protect the interests of investors in securities and to regulate the securities market has since formulated the SEBI (Prohibition of Insider Trading) Regulations, 1992 under the powers conferred on it under the SEBI Act, 1992. These regulations came into force with effect from 19th November 1992 and the same were made applicable to all companies whose shares were listed on Indian stock exchanges. These Regulations not only regulate insider trading but also seek to prohibit insider trading.

Insider trading means dealing in Securities of a company by its Directors, Employees or other Insiders based on unpublished Price Sensitive Information. Such dealings by Insiders erode the investors’ confidence in the integrity of the management and are unhealthy for the capital markets. The Insider Trading Regulations provides for policy on disclosure and internal procedures for prevention of Insider Trading. It also provides model Code of Conduct for protection of Insider Trading to be followed by the listed companies and its Directors, Employees or any other Insider.

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