Unpublished Price Sensitive Information

May 19, 2023

The Securities and Exchange Board of India (Sebi) recently proposed significant changes to the definition of Unpublished Price Sensitive Information (UPSI) to ensure regulatory certainty and uniform compliance among listed companies. The proposal aims to enhance transparency and timely disclosure of material events or information.

Tweaking the Definition of UPSI

Sebi’s consultation paper suggests amending the current definition of UPSI and bringing the disclosures required under Regulation 30 of LODR (Listing Obligations and Disclosure Requirements) under its purview. The objective is to provide clarity and consistency in identifying specific events as UPSI.

Disclosure Requirements

Listed entities are obligated under Regulation 30 to disclose material events or information promptly, within 24 hours of their occurrence. These events encompass a wide range of factors such as acquisitions, agreements, fraud or default by promoters, alterations in securities, ratings revisions, forensic auditing initiations, and changes in directors and key managerial personnel.

Board Meeting Outcomes

Additionally, listed entities must disclose the outcomes of board meetings pertaining to dividends, financial results, voluntary delisting, and more within just 30 minutes of the meeting’s closure, as per the rules.

Public Comments and Analysis

In a study conducted by Sebi and stock exchanges, 1,099 press releases from the top 100 listed companies between January 2021 and September 2022 were analyzed. Surprisingly, only 1.64% of these press releases were categorized as UPSI by the listed companies.

Insider Trading Concerns

The case of alleged insider trading raised concerns over the inadequate categorization of information as UPSI by companies. Sebi observed that a substantial number of alerts generated by its surveillance system on suspected insider trading cases could not be further examined due to non-categorization of material information by the listed entities.

Changes Approved by Sebi

During its board meeting in March, Sebi approved several changes to enhance the disclosure of material events or information by listed entities. These changes include the introduction of quantitative thresholds to determine the materiality of events/information and the disclosure requirements for specific types of agreements binding listed entities.

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