Sebi Proposes Broader Scope of UPSI

To improve transparency in market disclosures, the Securities and Exchange Board of India (Sebi) is proposing an expansion of the definition of Unpublished Price Sensitive Information (UPSI).

The regulator aims to include proposed fundraising activities, corporate restructuring plans, and one-time bank settlements under UPSI, in a bid to enhance regulatory clarity and consistency.

In its consultation paper, Sebi suggests that only certain types of agreements—those involving shareholder arrangements, joint ventures, and family settlements—should be considered price-sensitive if they affect the management and control of a firm and are known to the company.

Additionally, significant developments in corporate insolvency proceedings, such as the initiation or approval of resolution plans by tribunals, should be disclosed as potentially price-sensitive information.

The proposal also extends to forensic audits launched or concluded in cases of fund misappropriation or financial misstatements, which would need to be disclosed as price-sensitive if they have the potential to affect market behavior.

Currently, fundraising proposals are not included in the definition of UPSI, but Sebi is now suggesting that any proposed fundraising activities be disclosed as potentially price-sensitive. Similarly, significant financial restructurings, such as restructuring plans or one-time bank settlements, should be classified as UPSI.

Further recommendations include considering actions taken by regulatory or judicial bodies against a company or its key personnel—if these involve significant enforcement, fines, penalties, or sanctions—as price-sensitive. Sebi also advocates for the disclosure of outcomes from major litigations or disputes that could impact the company’s operations or financial standing.

The regulator proposes that major contracts or orders awarded to a company, or significant amendments or terminations to such agreements outside normal business activities, be disclosed as UPSI due to their potential effect on financial performance.

Additionally, any changes to essential licenses or approvals, including their granting, withdrawal, or suspension, should also be disclosed, as these could significantly impact company operations.

Sebi has invited public comments on these proposals by November 30, as it seeks to refine its regulations to better align with market transparency needs.

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