In legal terms, an “insider” typically refers to an individual who has privileged access to confidential or non-public information about a company, usually due to their position within the organisation. This information could include details about the company’s financial performance, upcoming mergers or acquisitions, or other material developments that could impact the company’s stock price. In many jurisdictions, insiders are subject to strict legal regulations and are prohibited from using such information for personal gain or from disclosing it to others improperly. Insider trading, which involves buying or selling securities based on non-public information, is illegal and can result in severe penalties, including fines and imprisonment. The concept of insider also extends to other areas of law, such as insider dealing in securities regulation or insider discrimination in employment law, where individuals with privileged information or relationships may have legal obligations or restrictions.
- A shareholder who owns more than 10% of a corporation, or an officer or director.
- An individual who has access to confidential company information.
An Insider is an individual who is purview to corporate information that has not been made public. Any material information not disclosed to the public is known as insider information.
By this virtue, any member of company personnel with access to material non-public information may be deemed an insider. Thus, an example of an insider would be a senior corporate officer, manager, accountant, broker, attorney, or even a family member. The term insider also extends to those who may own ten or more percent of voting shares of the company.
An insider is restricted from using insider information to make trades. When an insider engages in trading on insider information, he or she is said to be committing insider trading. Insider trading is considered illicit and may be punishable by law.
This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.
This glossary post was last updated: 29th March 2024.
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