SEBI broadens UPSI definition to boost transparency under insider trading regulations

SEBI has proposed expanding the scope of Unpublished Price Sensitive Information (UPSI) under its insider trading regulations to enhance transparency among listed companies. The consultation paper, released on November 9, suggests classifying proposed fundraising, restructuring plans, and one-time bank settlements as UPSI to enhance regulatory clarity while minimising additional compliance burdens.

UPSI refers to non-public information about a company or its securities that, when disclosed, could significantly impact their market price. UPSI typically includes information on financial results, dividends, changes in capital structure, mergers, acquisitions, delisting, business expansions, and changes in key managerial personnel.

The consultation paper proposes classifying agreements — such as shareholder, joint venture, and family settlements — that affect a company’s control as UPSI. It also suggests including corporate insolvency proceedings like resolution plan approvals and major restructuring actions, such as one-time bank settlements. Additionally, SEBI recommends disclosing outcomes of substantial litigation, significant contracts outside regular business, and key management changes, including auditor resignations, as potentially price sensitive.

However, routine superannuation or completion of terms for executives would be excluded. The proposal further suggests major financial events, including fundraising plans, corporate restructurings, and actions by regulatory or judicial bodies involving enforcement, fines, or sanctions, should be treated as UPSI.

Forensic audits addressing financial misstatements or fund misappropriations, along with their outcomes, would also qualify as UPSI.

Critical licensing developments — such as the granting, withdrawal, or suspension of essential approvals — would also fall under UPSI, as would significant financial events like mergers, acquisitions, and the awarding or termination of significant contracts beyond normal business activities.

The consultation paper follows the regulator's September update to trading plans, which introduced measures such as a reduced cool-off period and exceptions for incapacity or bankruptcy. These changes aim to enhance transparency while balancing compliance obligations for listed companies. This builds on previous regulatory adjustments, including stricter timelines for disclosures, quantitative thresholds for ‘material’ events, and requirements to verify market rumours.

SEBI has invited public comments on the proposals by November 30.