SEBI proposes to update the definition of Unpublished Price Sensitive Information (UPSI) under the Prohibition of Insider Trading (PIT) Regulations, 2015. The aim is to align the UPSI definition with events listed under Regulation 30 of the Listing Obligations and Disclosure Requirements (LODR) Regulations. This move seeks to bring regulatory clarity, certainty, and uniform compliance. The initiative stems from recommendations of the Sodhi Committee, which emphasized that not all information mandatorily qualifies as UPSI but that key events such as financial results, mergers, and dividends typically fall under this category. A consultation paper inviting public feedback highlighted concerns about materiality thresholds, compliance challenges, and the potential impact on trading windows. SEBI addressed these concerns, focusing on ease of doing business and compliance management, before finalizing its proposal. The Board is set to review and approve the proposed amendments, along with related procedural steps, to bring uniformity and transparency in the ecosystem.
Securities Exchange Board of India
Proposal to include events in the illustrative list of the definition of Unpublished Price Sensitive Information (UPSI) under Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015 to bring regulatory clarity, certainty and uniformity in compliance in the ecosystem
1. Objective
1.1. This memorandum seeks approval of the Board to include events in the illustrative list of the definition of Unpublished Price Sensitive Information (‘UPSI’) under the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015 (hereinafter referred to as “PIT Regulations” or “PIT”) with the objective to bring greater clarity and uniformity of compliance in the ecosystem by aligning the definition of UPSI with events from Para A and Para B of Part A of Schedule III as enumerated under Regulation 30 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred to as “LODR Regulations” or “LODR”).
2. Background
2.1. The High Level Committee to review the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992 under the Chairmanship of Justice N. K. Sodhi, Former Chief Justice of the High Courts of Kerala and Karnataka and a Former Presiding Officer of the Securities Appellate Tribunal (‘Sodhi Committee’) set up in 2015, while discussing the concept of UPSI was of the opinion that: “It would be important to ensure that regardless of whether the information in question is price-sensitive, no piece of information should mandatorily be regarded as ‘UPSI’”. With this approach, the Sodhi Committee, recommended that the events listed in definition of UPSI in the PIT Regulations were meant to be illustrative and would ordinarily be regarded as UPSI viz. financial results, dividends, mergers and acquisitions, changes in capital structure etc. The PIT Regulations were amended accordingly and also included “material events in accordance with the listing agreement” in the illustrative list of items mentioned in the definition of UPSI.
2.2. Thereafter, in 2018 the Committee on Fair Market Conduct (FMC), constituted by Securities and Exchange Board of India (SEBI) to review the existing legal framework to deal with market abuse to ensure fair market conduct, was of the view that all material events that are required to be disclosed as per LODR Regulations may not be UPSI under the PIT Regulations. Thus, based on the recommendation of the Committee on FMC, the definition of UPSI was amended to remove the explicit inclusion of “material events in accordance with the listing agreement” in the illustrative list of items mentioned within the definition of UPSI”.
The afore-mentioned amendment to the definition of UPSI was carried out with the expectation that the listed entities, guided by the principles as laid down in the definition of UPSI, will exercise their judgement with prudence and categorise information as UPSI and, thus, comply, in-spirit, with the principles laid down under PIT Regulations.
3. Need for review and previous public consultation
3.1. However, contrary to expectations, a study conducted by SEBI along with stock exchanges, revealed that, after the amendment to the definition of UPSI in the PIT Regulations, which removed the expression “material events in accordance with the listing agreement”, by and large, companies were seen to be categorizing only the items explicitly mentioned in PIT Regulations as UPSI. The market feedback also suggested that most companies consider this to be a ‘uniform practice’.
3.2. Therefore, in light of the above observations, SEBI felt that there exists a need to review the definition of UPSI. For the said purpose, SEBI issued a Consultation Paper on May 18, 2023 proposing to amend the definition of UPSI under PIT Regulations. The following amendment to the definition of UPSI was proposed in the said Consultation Paper:
Regulation 2(1)(n) of PIT Regulations, 2015
“(vi) material event in accordance with Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.”
3.3. The public feedback received on the said Consultation Paper, while largely agreeing with the proposal to amend the definition of UPSI, highlighted following issues:
Table 1: Feedback received on Consultation Paper dated May 18, 2023
| Sr. No | Issue | Feedback Received |
| 1. | ‘Material Information’ v/s ‘Price Sensitive Information’ and Materiality Threshold for UPSI | i. All events or information under Regulation 30 of LODR Regulations may not have impact on price of securities.
ii. Alternatively, expand the list of events under current definition of UPSI instead of including complete Regulation 30 of LODR Regulations |
| 2. | Enforcing compliances under PIT Regulations |
iii. Compliance management will increase
iv. Potential perpetual closure of trading window |
| 3. | Others | i. Amend the definition of UPSI post notification of LODR Amendments |
4. Steps taken to address the public feedback
4.1. Given the feedback, SEBI sought to address the issues highlighted therein, especially regarding ease of doing business (EODB) and compliance management.
4.2. EODB Measures for Disclosure of Material Events
4.2.1. While the proposal to align the definition of UPSI with Regulation 30 of LODR was under consideration, SEBI made amendments to LODR Regulations in 2023, which inter alia led to introduction of quantitative thresholds for determining ‘materiality’ of events / information, stricter timelines for disclosure of material events / information, market rumours to be verified and confirmed, denied or clarified, as the case may be, disclosure for certain types of agreements binding listed entities, etc.
4.2.2. For effective compliance with some of the above changes, Industry Standards Forum (ISF) took up verification of market rumours (as per the proviso to Regulation 30(11) of LODR Regulations) as one of its priority areas. The ISF guidance note came into effect from May 21, 2024. The guidance note would facilitate uniformity in approach towards compliance of Regulation 30(11) of LODR Regulations.
4.3. Flexibility in Provisions of Trading Plans
4.3.1. Analysis was also done to gauge probable impact of the proposed amendment on compliance management by listed entities. It was seen that in the proposed scenario of having to consider all material events as UPSI, the trading window was likely to be closed for a longer period than the existing scenario. This may have led to increased difficulty for insiders of the listed entity who are in perpetual possession of UPSI, to trade in the securities of the company.
4.3.2. Taking into consideration the above, it was decided that before amending the current definition of UPSI, the provisions of Trading Plans in PIT Regulations, 2015 should be reviewed, so as to facilitate and increase adoption of trading plans by persons who may be perpetually in possession of UPSI. Thus, changes to trading plans enabling greater flexibility such as reduction of cool-off period, introduction of price limit to trades, exceptions for non-implementation of the trading plan due to permanent incapacity or bankruptcy etc. have been introduced w.e.f. September 23, 2024.
5. Constitution of Working Group (“WG”) to review the definition of UPSI
5.1. In view of the developments discussed above, it was decided to proceed with the amendment of the definition of UPSI.
5.2. A working group comprising of market experts was constituted to make recommendations towards aligning the illustrative list of events in the definition of UPSI with events from Para A and Para B of Part A of Schedule III read with Regulation 30 of LODR. The WG also considered the public feedback received by SEBI on the previous Consultation Paper on proposed review of the definition of UPSI while making its recommendations.
5.3. The WG strived to ensure that its recommendations do not adversely affect the EODB or significantly increase the compliance requirement of listed entities.
6. Public Consultation
6.1. SEBI issued a Consultation Paper (Annexure A) on November 09, 2024 seeking public comments on the proposal to include events from Para A and Para B of Part A of Schedule III of LODR in the illustrative list of events in the definition of UPSI (hereinafter referred to as ‘Consultation Paper’). Public comments were sought on the following proposals:
| Proposal No. | Proposal Description |
| 1 | Include Change in Rating(s) in the definition of UPSI from Clause 3 of Para A of Part A of Schedule III of LODR. |
| 2 | Include fund raising proposed to be undertaken from Clause 4 of Para A of Part A of Schedule III of LODR. |
| 3 | Include agreements, by whatever name called, impacting the management and control of the company, from Clause 5 and 5A of Para A of Part A of Schedule III of LODR. |
| 4 | Include Fraud or defaults by a listed entity, its promoter, director, key managerial personnel, senior management, or subsidiary or arrest of key managerial personnel, senior management, promoter or director of the listed entity, whether occurred within India or abroad from Clause 6 of Para A of Part A of Schedule III and Clause 9 of Para B of Part A of Schedule III. |
| 5 | Amend regulation 2(1)(n)(v) of PIT Regulations to include: Change in key managerial personnel, other than due to superannuation or end of term, and resignation of a Statutory Auditor or Secretarial Auditor from Clause 7 of Para A of Part A of Schedule III.. |
| 6 | Include Resolution plan/ Restructuring/one-time settlement in relation to loans/borrowings from banks/financial institutions from Clause 9 and 10 of Para A of Part A of Schedule III. |
| 7 | Include Admission of winding-up petition filed by any party / creditors, admission of application by the corporate applicant or financial creditors for initiation of corporate insolvency resolution process of a listed corporate debtor and its approval or rejection thereof under the Insolvency Code from Clause 11 and 16 of Para A of Part A of Schedule III. |
| 8 | Include Initiation of forensic audit by whatever name called by company or any other entity for detecting misstatement in financials, misappropriation, siphoning or diversion of funds and receipt of final forensic audit report from Clause 17 of Para A of Part A of Schedule III |
| 9 | Include 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 from Clause 19 and 20 of Para A of Part A of Schedule III. |
| 10 | Include Clause 4 of Para B of Part A of Schedule III in the definition of UPSI by amending regulation 2.(1)(n)(iv) of PIT Regulations mergers, de-mergers, acquisitions, delistings, disposals and expansion of business, award or termination of order/contracts not in the normal course of business and such other transactions. |
| 11 | Include outcome of any litigations or disputes which may have an impact on the listed entity from Clause 8 of Para B of Part A of Schedule III |
| 12 | Include giving of guarantees or indemnity or becoming a surety by whatever named called for any third party from Clause 11 of Para B of Part A of Schedule III. |
| 13 | Include granting, withdrawal, surrender, cancellation or suspension of key licenses or regulatory approvals from Clause 12 of Para B of Part A of Schedule III. |
6.2. SEBI received responses from 58 persons / entities including listed entities, law firms, industry associations, institutions and professionals. A summary of public comments is given below.
| Total no. of comments received |
No. of comments agreeing to the proposal (Strongly Agree + Agree + Partially Agree) |
No. of comments disagreeing to the proposal (Strongly Disagree + Disagree) |
| 638 | 448 | 190 |
7. Deliberations with WG on public feedback
7.1. The public feedback received was shared with the WG for their comments. Based on the public feedback and discussion with the WG, appropriate changes have been incorporated in the proposed amendments.
8. Public comments in brief, our analysis thereon and recommendations are summarized in the following paras.
9. Change in ratings
9.1. Issue for Consultation
9.1.1. It was proposed in Consultation Paper to include “Change in Rating(s)” in the illustrative list of events in the definition of UPSI from Clause 3 of Para A of Part A of Schedule III of LODR.
9.2. Public comments and analysis:
9.2.1. The statistics on public comments received is tabulated below:
| Total no. of comments received |
No. of comments agreeing to the proposal |
No. of comments disagreeing to the |
| (Strongly Agree + Agree + Partially Agree) |
proposal (Strongly Disagree + Disagree) |
|
| 52 | 31 | 21 |
9.2.2. Suggestions / comments received on the proposal and SEBI analysis thereupon is summarized in Annexure B.
9.2.3. Feedback largely suggested to exclude ESG rating(s) from ‘change in ratings’ in the illustrative list of UPSI as rating agencies assign ESG rating(s) on the basis of assessments of public records, thus ESG rating(s) is not material from the UPSI definition point of view.
9.2.4. ESG Ratings are at a nascent stage and thus, it would be appropriate to carve out ‘ESG Ratings’ from the scope of ‘Change in Ratings’. Hence, the suggestion may be accepted.
9.3. Recommendation
9.3.1. It is proposed to include the following in the illustrative list of events in the definition of UPSI, “Change in rating(s) other than ESG rating(s)”
10. Fund raising proposed to be undertaken
10.1. Issue for Consultation
10.1.1. It was proposed in the Consultation Paper to include “fund raising proposed to be undertaken” in the definition of UPSI from Clause 4 of Para A of Part A of Schedule III of LODR.
10.2. Public comments and analysis:
10.2.1. The statistics on public comments received is tabulated below:
| Total no. of comments received |
No. of comments agreeing to the proposal |
No. of comments disagreeing to the |
| (Strongly Agree + Agree + Partially Agree) |
proposal (Strongly Disagree + Disagree) |
|
| 50 | 39 | 11 |
10.2.2. Suggestions / comments received on the proposal and SEBI analysis thereupon is summarized in Annexure B.
10.2.3. Feedback suggested to exclude fund raising for sector/industry where event is in usual course of business.
10.2.4. Events in the definition of UPSI are given for ‘illustrative guidance’. Further, if the fund raising is routine in nature and on predictable lines it would not “be likely to materially affect the price of the securities” and thus may not be UPSI as defined under PIT Regulations. Hence the suggestion may not be accepted.
10.3. Recommendation
10.3.1. It is proposed to include the following in the illustrative list of events in the definition of UPSI, “fund raising proposed to be undertaken”.
11. Agreements, by whatever name called, impacting management and control of the company
11.1. Issue for Consultation
11.1.1. It was proposed in Consultation Paper to include “Agreements, by whatever name called, impacting the management and control of the company” from Clause 5 and 5A of Para A of Part A of Schedule III of LODR in the illustrative list of events in the definition of UPSI.
11.2. Public comments and analysis:
11.2.1. The statistics on public comments received is tabulated below:
| Total no. of comments received |
No. of comments agreeing to the proposal |
No. of comments disagreeing to the |
| (Strongly Agree + Agree + Partially Agree) |
proposal (Strongly Disagree + Disagree) |
|
| 47 | 40 | 7 |
11.2.2. Suggestions / comments received on the proposal and SEBI analysis thereupon is summarized in Annexure B.
11.2.3. Feedback suggested to define the scope of agreements since ‘impact on the management of the company’ is vague. It was suggested that specific definition may be provided.
11.2.4. Given that events in the definition of UPSI are given for ‘illustrative guidance’, defining scope will make the regulations prescriptive and may not be prudent from the perspective of EODB. Hence, the suggestion may not be accepted. Further, situations impacting either of the ‘management’ or ‘control’ may also be provided for in the illustrative list of events.
11.3. Recommendation
11.3.1. It is proposed to include the following in the illustrative list of events in the definition of UPSI, “Agreements, by whatever name called, which may impact the management or control of the company”.
12. Fraud or defaults or arrest
12.1. Issue for Consultation
12.1.1. It was proposed in Consultation Paper to include “Fraud or defaults by a listed entity, its promoter, director, key managerial personnel, senior management, or subsidiary or arrest of key managerial personnel, senior management, promoter or director of the listed entity, whether occurred within India or abroad” from Clause 6 of Para A of Part A of Schedule III and Clause 9 of Para B of Part A of Schedule III of LODR in the illustrative list of events in the definition of UPSI.
12.2. Public comments and analysis:
12.2.1. The statistics on public comments received is tabulated below:
| Total no. of comments received |
No. of comments agreeing to the proposal |
No. of comments disagreeing to the |
| (Strongly Agree + Agree + Partially Agree) |
proposal (Strongly Disagree + Disagree) |
|
| 51 | 35 | 16 |
12.2.2. Suggestions / comments received on the proposal and SEBI analysis thereupon is summarized in Annexure B.
12.2.3. Public feedback stated that fraud, defaults, etc. by senior management may not generally have material impact on the price of securities of the listed entity. Hence, reference to senior management may be excluded from the proposal. The suggestion may be accepted.
12.2.4. It has also been suggested that events in the proposal may be specified to be in relation to the listed entity.
12.2.5. Instances of frauds or defaults may have a material impact on the price of the securities of the listed entity mainly when such event(s) occur in relation to the listed entity. Hence, the suggestion may be accepted.
12.3. Recommendation
12.3.1. It is proposed to include the following in the illustrative list of events in the definition of UPSI, “Fraud or defaults by the company, its promoter, director, key managerial personnel, or subsidiary or arrest of key managerial personnel, promoter or director of the company, whether occurred within India or abroad:
12.3.2. It is proposed to include the following explanation to Regulation 2 (1)(n) for the purpose of this sub-clause:
(i)‘Fraud’ shall have the same meaning as referred to in Regulation 2(1)(c) of Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003.
(ii) ‘Default’ shall have the same meaning as referred to in Clause 6 of Para A of Part A of Schedule III of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.
13. Change in key managerial personnel, other than due to superannuation or end of term, and resignation of a Statutory Auditor or Secretarial Auditor 1. Issue for Consultation
13.1.1. It was proposed in Consultation Paper to include: “Change in key managerial personnel, other than due to superannuation or end of term, and resignation of a Statutory Auditor or Secretarial Auditor” from Clause 7 of Para A of Part A of Schedule III of LODR in the illustrative list of events in the definition of UPSI.
13.2. Public comments and analysis:
13.2.1. The statistics on public comments received is tabulated below:
| Total no. of comments received |
No. of comments agreeing to the proposal |
No. of comments disagreeing to the |
| (Strongly Agree + Agree + Partially Agree) |
proposal (Strongly Disagree + Disagree) |
|
| 50 | 37 | 13 |
13.2.2. Suggestions / comments received on the proposal and SEBI analysis thereupon is summarized in Annexure B.
13.2.3. Feedback was largely in favour of the proposal. Since (i) changes in KMP for reasons other than due to superannuation or end of term; and (ii) resignation of a Statutory Auditor or Secretarial Auditor may potentially have a material price impact hence the proposal may be accepted.
13.3. Recommendation
13.3.1. It is proposed to include the following in the illustrative list of events in the definition of UPSI, “Change in key managerial personnel, other than due to superannuation or end of term and resignation of a Statutory Auditor or Secretarial Auditor”.
14. Resolution plan/ Restructuring/one-time settlement in relation to loans/borrowings from banks/financial institutions
14.1. Issue for Consultation
14.1.1. It was proposed in Consultation Paper to include: “Resolution plan/ Restructuring/one-time settlement in relation to loans/borrowings from banks/financial institutions” from Clause 9 and 10 of Para A of Part A of Schedule III of LODR in the illustrative list of events in the definition of UPSI.
14.2. Public comments and analysis:
14.2.1. The statistics on public comments received is tabulated below:
| Total no. of comments received |
No. of comments agreeing to the proposal |
No. of comments disagreeing to the |
| (Strongly Agree + Agree + Partially Agree) |
proposal (Strongly Disagree + Disagree) |
|
| 42 | 37 | 5 |
14.2.2. Suggestions / comments received on the proposal and SEBI analysis thereupon is summarized in Annexure B.
14.2.3. Feedback suggested that there should be threshold limit as prescribed under LODR Regulations for reckoning the event of one time settlement with the bank as a UPSI.
14.2.4. The event of one time settlement is listed in Para A of Part A of Schedule III of LODR Regulations wherein no materiality thresholds have been prescribed. Hence the suggestion may not be accepted.
14.3. Recommendation
14.3.1. It is proposed to include the following in the illustrative list of events in the definition of UPSI, “Resolution plan/ Restructuring or one time settlement in relation to loans/borrowings from banks/financial institutions”.
15. Admission of winding-up petition / initiation of corporate insolvency resolution process (CIRP)
15.1. Issue for Consultation
15.1.1. It was proposed in Consultation Paper to include: “Admission of winding-up petition filed by any party / creditors, admission of application by the corporate applicant or financial creditors for initiation of corporate insolvency resolution process (CIRP) of a listed corporate debtor and its approval or rejection thereof under the Insolvency Code” from Clause 11 and 16 of Para A of Part A of Schedule III of LODR in the illustrative list of events in the definition of UPSI.
15.2. Public comments and analysis:
15.2.1. The statistics on public comments received is tabulated below:
| Total no. of comments received |
No. of comments agreeing to the proposal |
No. of comments disagreeing to the |
| (Strongly Agree + Agree + Partially Agree) |
proposal (Strongly Disagree + Disagree) |
|
| 47 | 39 | 8 |
15.2.2. Suggestions / comments received on the proposal and SEBI analysis thereupon is summarized in Annexure B.
15.2.3. The public feedback is in favour of including admission of winding-up petition and initiation of corporate insolvency resolution process in the illustrative list of events in the definition of UPSI. Hence, the proposal may be accepted.
15.3. Recommendation
15.3.1. It is proposed to include the following in the illustrative list of events in the definition of UPSI, “Admission of winding-up petition filed by any party / creditors and admission of application by the Tribunal filed by the corporate applicant or financial creditors for initiation of corporate insolvency resolution process against the company as a corporate debtor, approval of resolution plan or rejection thereof under the Insolvency and Bankruptcy Code, 2016”.
16. Initiation of Forensic Audit and receipt of final forensic audit report 16.1. Issue for Consultation
16.1.1. It was proposed in Consultation Paper to include: “Initiation of forensic audit (by whatever name called) by company or any other entity for detecting mis-statement in financials, misappropriation/ siphoning or diversion of funds and receipt of final forensic audit report” from Clause 17 of Para A of Part A of Schedule III of LODR in the illustrative list of events in the definition of UPSI.
16.2. Public comments and analysis:
16.2.1. The statistics on public comments received is tabulated below:
| Total no. of comments received |
No. of comments agreeing to the proposal |
No. of comments disagreeing to the |
| (Strongly Agree + Agree + Partially Agree) |
proposal (Strongly Disagree + Disagree) |
|
| 48 | 35 | 13 |
16.2.2. Suggestions / comments received on the proposal and SEBI analysis thereupon is summarized in Annexure B.
16.2.3. The public feedback is in favour of the proposal to include initiation of forensic audit for detecting mis-statement in financials, misappropriation/ siphoning or diversion of funds and receipt of the final report.
16.2.4. It has also been suggested to not consider receipt of final forensic audit report as UPSI.
16.2.5. The proposal specifies forensic audit conducted for the purpose of detecting mis-statement in financials, misappropriation/ siphoning or diversion of funds. The information regarding outcome of such forensic audit may also be UPSI till it becomes generally available information. Hence the suggestion may not be accepted.
16.3. Recommendation
16.3.1. It is proposed to include the following in the illustrative list of events in the definition of UPSI, “Initiation of forensic audit, by whatever name called, by the company or any other entity for detecting mis-statement in financials, misappropriation/ siphoning or diversion of funds and receipt of final forensic audit report”.
17. Action(s) initiated or orders passed
17.1. Issue for Consultation
17.1.1. It was proposed in Consultation Paper to include “Action(s) 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” from Clause 19 and 20 of Para A of Part A of Schedule III of LODR in the illustrative list of events in the definition of UPSI.
17.2. Public comments and analysis:
17.2.1. The statistics on public comments received is tabulated below:
| Total no. of comments received |
No. of comments agreeing to the proposal |
No. of comments disagreeing to the |
| (Strongly Agree + Agree + Partially Agree) |
proposal (Strongly Disagree + Disagree) |
|
| 58 | 29 | 29 |
17.2.2. Suggestions / comments received on the proposal and SEBI analysis thereupon is summarized in Annexure B.
17.2.3. Public feedback stated that actions or orders passed against the senior management may not generally have material impact on the price of securities of the listed entity. Hence, reference to senior management may be excluded from the proposal. The suggestion may be accepted.
17.3. Recommendation
17.3.1. It is proposed to include the following in the illustrative list of events in the definition of UPSI, “Action(s) initiated or orders passed by any regulatory, statutory, enforcement authority or judicial body against the company or its directors, key managerial personnel, promoter or subsidiary, in relation to the company”.
18. Award or termination of order/contracts not in the normal course of business
18.1. Issue for Consultation
18.1.1. It was proposed in Consultation Paper to include “award or termination of order/contracts not in the normal course of business” from Clause 4 of Para B of Part A of Schedule III in the illustrative list of events in the definition of UPSI.
18.2. Public comments and analysis:
18.2.1. The statistics on public comments received is tabulated below:
| Total no. of comments received |
No. of comments agreeing to the proposal |
No. of comments disagreeing to the |
| (Strongly Agree + Agree + Partially Agree) |
proposal (Strongly Disagree + Disagree) |
|
| 47 | 36 | 11 |
18.2.2. Suggestions / comments received on the proposal and SEBI analysis thereupon is summarized in Annexure B.
18.2.3. Feedback suggested that there should be threshold limit as prescribed under Regulation 30 (4) of LODR for reckoning the event of award or termination of order / contract not in the normal course of business as UPSI.
18.2.4. Given that event of award or termination of order / contract is listed under Clause 4 of Para B of Part A of Schedule III which allows for application of materiality threshold the suggestion may be accepted.
18.3. Recommendation
18.3.1. It is proposed to include in the illustrative list of events in the definition of UPSI, “award or termination of order/contracts not in the normal course of business”.
19. Outcome of litigation(s) or dispute(s)
19.1. Issue for Consultation
19.1.1. It was proposed in Consultation Paper to include: “outcome of any litigation(s) or dispute(s) which may have an impact on the listed entity” from Clause 8 of Para B of Part A of Schedule III of LODR in the illustrative list of events in the definition of UPSI.
19.2. Public comments and analysis:
19.2.1. The statistics on public comments received is tabulated below:
| Total no. of comments received |
No. of comments agreeing to the proposal |
No. of comments disagreeing to the |
| (Strongly Agree + Agree + Partially Agree) |
proposal (Strongly Disagree + Disagree) |
|
| 53 | 33 | 20 |
19.2.2. Suggestions / comments received on the proposal and SEBI analysis thereupon is summarized in Annexure B.
19.2.3. Feedback suggested that there should be threshold limit as prescribed under LODR Regulations for reckoning outcome of any litigation(s) or dispute(s) as UPSI.
19.2.4. Given that the event “outcome of any litigation(s) or dispute(s) which may have an impact on the listed entity” is listed under Clause 8 of Para B of Part A of Schedule III which allows for application of materiality threshold the suggestion may be accepted.
19.3. Recommendation
19.3.1. It is proposed to include in the illustrative list of events in the definition of UPSI “outcome of any litigation(s) or dispute(s) which may have an impact on the company”.
20. Giving of guarantees or indemnity
20.1. Issue for Consultation
20.1.1. It was proposed in Consultation Paper to include: “Giving of guarantees or indemnity or becoming a surety, by whatever named called, for any third party” from Clause 11 of Para B of Part A of Schedule III of LODR in the illustrative list of events in the definition of UPSI.
20.2. Public comments and analysis:
20.2.1. The statistics on public comments received is tabulated below:
| Total no. of comments received |
No. of comments agreeing to the proposal |
No. of comments disagreeing to the |
| (Strongly Agree + Agree + Partially Agree) |
proposal (Strongly Disagree + Disagree) |
|
| 47 | 25 | 22 |
20.2.2. Suggestions / comments received on the proposal and SEBI analysis thereupon is summarized in Annexure B.
20.2.3. Feedback suggested that only guarantees or indemnity which are not in ordinary course of business should be covered in the definition of UPSI.
20.2.4. Giving of guarantees or indemnity or becoming a surety if done under the normal course of business may not have a material impact on the price of the securities of the listed entity. Hence the suggestion may be accepted.
20.3. Recommendation
20.3.1. It is proposed to include the following in the illustrative list of events in the definition of UPSI, “Giving of guarantees or indemnity or becoming a surety, by whatever named called, for any third party, by the company not in the normal course of business”.
21. Granting, withdrawal, surrender, cancellation or suspension of key licenses or regulatory approvals
21.1. Issue for Consultation
21.1.1. It was proposed in Consultation Paper to include: “granting, withdrawal, surrender, cancellation or suspension of key licenses or regulatory approvals” from Clause 12 of Para B of Part A of Schedule III of LODR in the illustrative list of events in the definition of UPSI.
21.2. Public comments and analysis:
21.2.1. The statistics on public comments received is tabulated below:
| Total no. of comments received |
No. of comments agreeing to the proposal |
No. of comments disagreeing to the |
| (Strongly Agree + Agree + Partially Agree) |
proposal (Strongly Disagree + Disagree) |
|
| 46 | 32 | 14 |
21.2.2. Suggestions / comments received on the proposal and SEBI analysis thereupon is summarized in Annexure B.
21.2.3. Feedback suggested that key licenses and regulatory approvals should be defined whose grant, withdrawal, surrender, cancellation or suspension should be considered for reckoning the event as UPSI.
21.2.4. Key licenses, regulatory approvals, etc. depend on the industry or sector. For information to be classified as UPSI it must also possess the likelihood of materially affecting the price of security of a listed entity. Hence the suggestion may not be accepted.
21.3. Recommendation
21.3.1. It is proposed to include the following in the illustrative list of events in the definition of UPSI, “granting, withdrawal, surrender, cancellation or suspension of key licenses or regulatory approvals”.
22. Materiality Thresholds for identification of events as UPSI
22.1. As discussed above, in the proposals for events to be included from Para B of Part A of Schedule III of LODR Regulations, it has been suggested that there may be threshold limits as prescribed under LODR Regulations for reckoning an event as UPSI.
22.2. Application of threshold limit as prescribed under LODR Regulations would facilitate EODB for listed entities as well as bring about regulatory clarity, certainty and uniformity in compliance. Hence, the suggestion may be accepted.
22.3. Recommendation
22.3.1. It is proposed to include the following explanation to Regulation 2 (1)(n): “For identification of events, enumerated in this clause as UPSI, the guidelines for materiality referred at para B of Part A of Schedule III of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended from time to time, shall be applicable”.
23. Other Issues
23.1. Recommendation:
23.1.1. For smooth implementation of the proposed amendments, a reasonable time of 90 days may be granted. Accordingly, the proposed amendments may be made effective 90 days from the date of notification of the regulations.
24. Proposed amendments to PIT Regulations
24.1. The proposed amendments to provisions related to definition of UPSI are placed at Annexure C.
25. Proposal
25.1. The Board is requested to
25.1.1. consider and approve the proposals as detailed under paragraphs no. 9.3, 10.3, 11.3, 12.3, 13.3, 14.3, 15.3, 16.3, 17.3, 18.3, 19.3, 20.3, 21.3, 22.3, 23.1 and 24.1 above and the consequent draft amendment notification placed at Annexure D.
25.1.2. authorize the Chairperson to make consequential and incidental changes and take necessary steps to give effect to the decisions of the Board.
Annexure-A
Consultation paper is available on SEBI website
Annexure-B
This has been excised for reasons of confidentiality.
Annexure-C
This shall be notified at a later date.
Annexure-D
This shall be notified at a later date.
Source: SEBI Board Meeting Dated: Wednesday 18th December 2024
