Breaking Down The Regulations: Exploring The Loopholes And Misuse Of Insider Trading And Related Party Transactions
Manav Duggal & Siddharth Bharadwaj, O.P. Jindal Global University
ABSTRACT
India has become a major base for several large companies that consist of a complex pool of investors and at times of varying scale, from the common innocent man to multi-crore financial institutions. However, the individuals who conduct the day-to-day business affairs of these large companies hold an upper hand in abusing the information and funds available at their disposal due to their employment. To safeguard the numerous category of investors, the Government has established and repeatedly strengthened the corporate governance regime to keep the company’s insiders at bay. However, to this date there are several loopholes and lack of compliance of the stringent regulations by the company owing to the discrepancy in accessibility of resources being very large between the two. This paper aims to identify two impending loopholes that exist to this date at large within this regime by analysing the laws at present and citing case studies along with the amendments brought around consecutively in aim of extinguishing them. Being, Insider Trading and Related Party Transactions. The paper also makes suggestive measures to improve this regime within the immediate short-term which will eliminate the loopholes employed by the companies to escape the complex regulatory net and sheds light on the future that can be adopted in this pursuit. The paper helps one to conclude that although the regime pertaining to insider trading and related party transactions has evolved over the years but still it is not efficient to keep a check on these. However, identifying these are of utmost importance as it poses a threat in overall functioning of the companies and can harm the investors at large and shake their confidence in the market.
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