Securities and Exchange Board of India (SEBI) may expand the ambit of Unpublished Price Sensitive Information (UPSI) by including restructuring plans, proposed fundraising activities, and one-time bank settlements. The market regulator has also proposed to make it mandatory for listed entities to disclose the outcome of meetings of the board of directors held to discuss such price-sensitive information, within 30 minutes of the closure of the meeting.

What is UPSI?

UPSI means any information, relating to a company or its securities, directly or indirectly, that is not generally available which upon becoming generally available, is likely to materially affect the price of the securities.  

SEBI’s plan

According to a study by SEBI on material events disclosed to the stock exchanges and events classified as UPSI by listed entities, companies were seen to be categorizing only the items explicitly mentioned in the PIT Regulations as UPSI, thus not complying with the law in spirit. 

“Thus, SEBI felt that there exists a need to review the definition of UPSI to bring about regulatory clarity, certainty and uniformity in compliance for the listed companies,” the regulator said in a consultation paper. SEBI has proposed that any decision with respect to fund raising proposed to be undertaken as well as any upward or downward revision in company ratings may be included in illustrative list of events in the definition of UPSI.

Developments in corporate insolvency proceedings that includes approval of resolution plans, restructuring, one-time settlement in relation to loans and borrowings from banks or financial institutions will be included as well. 

Agreements that impact the management and control of the company will be included in the UPSI definition. This includes shareholder, joint venture and family settlement agreements that may be price sensitive.  

Fraud or defaults by a listed entity and its promoters, directors and senior management as well as initiation of forensic audit for misstatement in financials, misappropriation, siphoning or diversion of funds will be brought under the UPSI definition. 

Actions initiated or orders passed by any regulatory, statutory, enforcement authority or judicial body against the listed entity or its directors, key managerial personnel, senior management, promoter or subsidiary, in relation to the listed entity will be included in the definition of UPS,” the Sebi consultation paper said. 

Mergers, acquisitions, delistings, and expansion of business, award or termination of contracts not in the normal course of business and such other transactions will be treated as price sensitive information. 

Granting, withdrawal, surrender, cancellation or suspension of key licenses or regulatory approvals as well as giving of guarantees or indemnity or becoming a surety, by whatever named called, for any third party will be considered as UPSI. 

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

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