Sebi Expands UPSI Scope: Fundraising, Restructuring

New Delhi, Mar 13 (PTI) Markets regulator Sebi has widened the ambit of the scope of Unpublished Price Sensitive Information (UPSI) by including any proposed fundraising activities agreements which can impact the management or control of the company, restructuring plans, and one-time bank settlements.

The move is aimed at enhancing regulatory clarity, certainty and uniformity in compliance in the ecosystem.

To give this effect, Sebi, in a notification issued on March 11, amended insider trading regulations. The new rules would come into force from June 10.

In its notification, Sebi said that any proposed fundraising activity, upward or downward revisions in credit ratings, other than ESG ratings, and agreements affecting the management or control of the company would be considered as UPSI.

Further, developments relating to corporate insolvency processes, including the clearance of resolution plans, one-time settlements, or restructuring of loans and borrowings from banks or financial institutions would fall under the UPSI ambit.

Sebi said that 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 would be classified as UPSI.

Any initiation of forensic audits or receipt of final forensic audit report; with regards to financial misstatements, misappropriation, siphoning, or diversion of funds by the company would come under the scope of UPSI.

Any action initiated or orders passed within India or abroad, by regulatory, statutory, enforcement authority or judicial body against the company or its directors, key managerial personnel, promoter or subsidiaries would be categorised as UPSI.

The granting, withdrawal, surrender, suspension, or cancellation of critical licenses or regulatory approvals and guarantees, indemnities, or sureties for third parties would constitute UPSI.

In addition, flexibility has been provided to make entries in the structured digital database on a deferred basis, within two days, as well as to not have mandatory tradingwindow closure.

"Entry of information, not emanating from within the organisation, in structureddigital database may be done not later than 2 calendar days from the receipt of such information... For unpublished price sensitive information not emanating from within the listed company, the trading window may not be closed," Sebi said.

With this amendment now events that are deemed to be UPSI have increased from the earlier five events to 16 events, Makarand M Joshi, Founder partner MMJC and Associates, a corporate compliance firm, said.

This will lead to a decrease in litigations on whether a particular event is UPSI or not. Also this will further reduce appeals that were successful on the basis of identification of UPSI, he added.