Persons with access to inside information (Insiders) in a joint-stock company generally refer to all individuals who can access a company’s inside information by virtue of their position or relationship with the company.

Iraqi Securities Commission instructions and regulatory frameworks addressed who is considered an “insider” within a legal and regulatory approach aimed at protecting the market and ensuring equal opportunity.

Definition of Insiders under Instruction No. 16 of 2011

Instruction No. (16) of 2011, Article (1), defined insiders as persons who access inside information due to their positions, jobs, ownership, or relationships—directly or indirectly—with whoever holds inside information. This includes:

• Board members and their advisers

• The managing director (general manager)

• The chief financial officer

• Internal auditors

• External auditors

• Any person who obtains such information

Scope of Insiders in a Joint-Stock Company

This definition shows that the scope of persons with access to inside information (Insiders) in a joint-stock company covers anyone who may receive inside information—whether from within or outside the company—so long as their connection to the company or to the information holder enabled them to access it.

Insiders in a Joint-Stock Company under the 2019 Draft Securities Law

In the 2019 Draft Securities Law, the legislator expanded the categories of insiders in detail under Article (59/Second). The draft listed multiple categories reflecting an intention to broaden liability and prevent avoidance on the ground that a person does not occupy a specifically named position.

Key Insider Categories in the 2019 Draft

The most prominent categories include:

• Senior management and managers of the securities issuer

• Anyone who accesses inside information by virtue of their job or relationship with the issuer

• Major shareholders

• Internal and external account auditors

• Licensed persons, such as brokerage firms and their employees

• Institutions or individuals with a working relationship with the issuer or who provide services to it

• Parties submitting acquisition or merger offers involving the issuer

• Anyone who obtained inside information in any manner from any of the above (beneficiaries of leaks)

Regulatory Note on the Expanded Listing

This level of detail may be more than what is typically needed in statutory text, because the 2011 definition was already broad and comprehensive through the phrase “any person who obtains such information,” covering both direct and indirect access.

This reflects the Iraqi legislator’s focus on ensuring that no exploiter of inside information can escape liability by claiming they fall outside a limited list of positions; the decisive factor is receiving the confidential information and benefiting from it.

Classifications of Insiders

From an analytical perspective, insiders are sometimes divided into sub-categories to understand how close they are to inside information and how they received it.

Primary Insider

A primary insider is a person who, by virtue of their position or job, is expected to know inside information. They occupy a position of responsibility and trust within the company or have a direct link to it. Examples include:

• Board members

• Senior executive management, such as the general manager and CFO

• Major shareholders whose holdings influence company decisions

• Auditors

• The company’s legal advisers

Internal Primary Insider

An internal primary insider belongs to the company’s internal organizational structure. The most serious examples are board members and executive management because they know not only the information itself, but also its context, sources, and the company’s future plans.

This enables them to make successful investment decisions (buying or selling shares) before others. This group is also often described as “related parties,” whose daily work requires dealing with the company’s confidential data.

External Primary Insider

An external primary insider is someone outside the company’s employee structure who, due to official duties, is connected to the company and has access to its information. Examples include:

• The external auditor appointed by the company or recognized by the securities authority to review accounts

• A financial or legal adviser appointed for a company-related project
  The risk here lies in professional trust and independence; if such persons exploit confidential information, they breach professional integrity. The 2011 instructions explicitly included the external auditor among insiders.

Secondary Insider

A secondary insider is a person who is not formally entitled to access inside information but manages—through lawful or unlawful means—to obtain inside information before publication.

This person is sometimes called an “accidental insider” if they received the information by coincidence, or an “agent insider” if it was passed to them by a primary insider. Examples include:

• A junior employee who accidentally sees a confidential document

• A relative or friend of a manager who receives the information privately

• A third party who hears the information unintentionally, such as a driver or companion overhearing a manager’s call

Criminalization of Leaked Information (Tipping)

Iraqi legislation does not expressly use the term “secondary insider,” but it covers such persons through the general definition. The 2011 instructions used the phrase “any person who obtains such information,” while the 2019 draft added wording that covers institutions and individuals who obtained inside information “in any manner” from the listed persons. This captures trading based on leaked information (tipping): the recipient who exploits the information is treated as an insider in the legal sense and is accountable like the person who leaked it.

Proof and Responsibility of Primary vs Secondary Insiders

When the law defines duties of confidentiality and bans on exploitation, it typically imposes them on those expected to access inside information (primary insiders). Accordingly, senior officers may be presumed to know inside information in due time because of their responsibilities.

For secondary insiders, it generally must be proven that they actually knew the undisclosed information and exploited it despite not being authorized to know it. In the end, both types are legally responsible if they buy or sell based on confidential inside information.

Prohibition of Trading Based on Inside Information in Iraqi Law

Iraqi law and its implementing regulations expressly adopt the principle that exploiting inside information to gain benefits at the expense of other investors is prohibited. This is reflected in several key regulatory and legislative texts.

Iraqi Securities Commission Instruction No. 16 of 2011

The 2011 instructions categorically prohibited leaking or exploiting inside information before public disclosure. Article (4) contains an explicit ban on insiders leaking inside information before it is announced through the Commission, the market, or any public announcement channel. This means:

• An insider who holds material undisclosed information may not disclose it to any party or person outside official disclosure procedures.

• The insider—and anyone who receives the information directly or indirectly—may not trade related securities before official publication.

• Violations may lead to disciplinary liability and potentially criminal liability depending on the circumstances.

2019 Draft Securities Law (Not Yet Enacted)

The 2019 draft confirmed this principle in Article (59) by prohibiting trading on the basis of material inside information not disclosed to the public about the issuer or its securities. Paragraph (Third) further details prohibited conduct, including:

1. The insider buying or selling securities related to the inside information—whether for their own account or for a third party—before disclosure.

2. The insider providing the inside information to others or advising others to buy or sell based on it before announcement.
   The draft therefore bans both insider’s personal trading and tipping (passing the information) or recommending trades based on it, covering direct and indirect exploitation comprehensively.

Iraqi Penal Code No. 111 of 1969, Article 437

Before specialized securities-market rules criminalized the exploitation of inside information, similar conduct could theoretically fall under a general penal provision on disclosing professional/functional secrets. Article 437 penalizes a person who learns a secret through their job, trade, profession, or work and then discloses it outside legally permitted cases or uses it for their own benefit or the benefit of another. This may apply where a manager or employee discloses inside information or exploits it for personal gain (such as selling shares based on it), as a breach of confidentiality and trust.

Conclusion

Persons with access to inside information (Insiders) in a joint-stock company include anyone who reaches inside information through position or direct or indirect relationships.

The 2011 instructions set a broad definition covering internal and external insiders as well as anyone who obtains the information, while the 2019 draft expanded the categories and reinforced liability for leaked-information trading (tipping).

The prohibition of trading based on inside information in Iraqi law appears clearly in the 2011 instructions and the 2019 draft, alongside potential reliance on penal rules governing disclosure of professional secrets when appropriate.

If you are a director, shareholder, auditor, broker, or a party who received information before it was publicly announced and you need a legal assessment of whether you fall within the scope of persons with access to inside information (Insiders) in a joint-stock company—and what confidentiality duties and trading prohibitions may apply—contact Osama Tuma for Legal Services and Advisory, a law firm in Iraq providing specialized advice in securities, compliance, disclosure, and investigations into leaks and pre-announcement trading.