Are you a government employee and have an interest in the share market? If you are a government employee, you may also ask your friends if government employees invest in the share market. Therefore, to solve this confusion in this post, we will take a deep look at this and understand it with the help of Central Civil Services (Conduct) Rules, 1964. If you want to know about the same, keep analyzing this post to understand rules and regulations.
Can Government Employee Invest in Share Market?
If you are a government servant, you can also invest in the stock market, but you need to keep the stock for a maximum of six months, and after this, you need to sell that. This may not be very clear, so let’s divide this information into several parts and discuss several other questions that arise with this.
As per Central Civil Services’ section 35(1), you can not trade in intraday trading if you are a government worker. Here, none of the government servants will trade or buy and sell shares, stocks or any other investment other than the periodic investment. You can make a periodic investment with the help of an authorized broker or another professional who is permitted or certified or have proper certification. You can invest some of your money in mutual funds, but you can not do intraday trading and can not buy shares, stocks, or other similar commodities.
Now questions arise, whether the government servant can get stakes from promoters or not. It is also mentioned in 40(i) that none of the government employees can become their authorized relatives or any other person acting on behalf of taking stake from promoters.
Because of these reasons, if any government servant has stocks from the directors of companies or officials or mates or partners, then it will be examined as an investment. So, if you are a government worker, then you can also not acquire stakes from promoters.
Is a Government Employee Eligible to Apply for IPO?
However, Government employees are eligible to apply for IPO, but you should remember you shouldn’t be part of the fixed pricing process. In rule 40(ii) of Central Civil Services (Conduct) Rules, you can read that government employees are not eligible to be part of the price determination phase of a central public sector entity’s IPO or Initial Public Offerings or Follow up POs. These employees can apply for follow-up public offerings of the government business enterprises by themselves. Or with the help of their relatives or any other person who is participating on behalf of them.
Also, if there is any doubt about any activity mentioned in sub-rule 35 or 40, the central government’s decision will be implemented.
Government Employees Eligible to Do Business With Financial Firms and Public Limited Firms?
So, can government employees do business with banks and public ltd firms? It is also one of the crucial questions that come into most government employee’s minds. If you think you can do business with banks or public limited firms, then you should know. Neither you nor your relatives or any person on behalf of you are eligible to do business with financial firms or any public limited firms.
If you are a government worker, you can not take a loan from official connections and connected people. According to CCSR,1964 government employees can not take the loan, borrow, or deposit funds from their local government or any other connected officials. In simple terms, you can not borrow money from the official connections or any connected people, whether it is an individual, organization, or any private limited entity.
Can Government Employees Offer Loans to Official People?
If government employees give loans to people and charge interest, then it is not allowed. However, they can give a small amount as an interest-free loan to their close friend, relatives, and another close person for a short time. Besides this, he can also keep a credit card account with the one tradesman and can have advance pay to his work which is hired by himself or on his behalf. However, all these rules can be implemented if he has taken prior approval from the government.
What If Some Transactions Are Essential to Do But Not Allowed?
When such cases arise, that government official can report to his specified authority and obey the compliance issued by the concerned authority. In short, if you face any situation that is not allowed as per sub-rules given in Central Civil Services Rule and you violate by doing that, then, in that case, you have to talk with the concerned authority and implement their final decision.
So, can government employees invest in the share market? You can invest but not trade, and you need to keep a share of any company for a maximum of 6 months. Because during the six months, but after this, it will be treated as speculation.
In this post, you learned whether government employees could invest in the share market, apply for an IPO, take a loan or offer a loan or not. I hope now you have an idea about the investment rules and regulations for government employees. If you have any doubt related to this topic in your mind or are willing to add some points to this post, then you can show your thoughts below.