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5-yr jail for insider trading

The much-awaited Companies Bill introduced in Lok Sabha on Wednesday seeks to bring insider trading under the ambit of criminal law, punishable with a maximum of five years’ imprisonment. HT reports. New deal for shareholder democracy

business Updated: Dec 15, 2011 01:39 IST
HT Correspondent

The much-awaited Companies Bill introduced in Lok Sabha on Wednesday seeks to bring insider trading under the ambit of criminal law, punishable with a maximum of five years’ imprisonment.

The global corporate world was shaken a few months ago when Wall Street hedge fund Galleon founder Raj Rajaratnam and then Goldman Sachs director Rajat Gupta were hauled in for insider trading. Rajaratnam has since been sentenced to 11 years in jail, and Gupta is set for trial next year.

The new Companies Bill takes a similarly serious view on insider trading. Depending upon the quantum of damage, an offender may be fined between Rs 5 lakh and Rs 25 crore or three times the amount of profit made out of insider trading. http://www.hindustantimes.com/Images/HTEditImages/Images/15-11-11-buss23.jpg

“Depending on the seriousness and gravity of the offence, the court could decide on the level of punishment, just as in case of murder,” a business leader who did not want to be identified told Hindustan Times. “Not all murders lead to the same level of punishment.”

“The structure of the bill is contemporary and sound and the way it seemed to be emerging encouraged us because it had elements of some visionary improvements,” said Sidharth Birla, chairman, FICCI Corporate Law Committee, welcoming the deterrant measures in the new bill.

New bill: room for more women in boardrooms

The new Companies Bill has for the first time put the spotlight on the number of women inside the boardrooms with a proposal to make it mandatory for companies to have atleast 1 woman director.

If implemented, this clause is expected to increase the representation of women to over 8% in Indian companies.

At present, there are only 16 women on the board of directors of the top-30 companies listed in the stock markets, making up an abysmal 4.8% share of people holding directorship positions. In the top-100 companies, the number goes up to 50 or 5.4%, while in the BSE 500 index there are only a little over 190 women of the over 3,500 directorship positions.

This is far below the state of affairs in the developed countries. Europe has some of the largest representation of women on the board of their firms with Scandinavian countries leading the way. Norway, Finland and Sweeden have 39%, 25% and 23% representation of women, respectively.