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Unpublished Price Sensitive Information (UPSI)

30 Sep, 2018 RBI General Studies


DEFINITION of Unpublished Price Sensitive Information

Regulation 2(n) of SEBI (Prohibition of Insider Trading) Regulations, 2015 defines Unpublished Price Sensitive Information (“UPSI”) as any information, relating to a company or its securities, directly or indirectly, that is not generally available which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.

  • Financial results (both half-yearly and annual) of the company;
  • Intended declaration of dividend (both interim/final)
  • Issue of shares by way of public rights, bonus etc.
  • Any major expansion plans or execution of new projects
  • Amalgamations, mergers and takeovers
  • Disposal of the whole or substantially the whole of the undertaking
“Insider” means any person who,
is or was connected with the company or is deemed to have been connected with the company and is reasonably expected to have access to unpublished price sensitive information in respect of securities of company,
has received or has had access to such unpublished price sensitive information.


Who is a connected person?
“connected person” means any person who  
is a director, as defined in clause (13) of section 2 of the Companies Act, 1956 (1 of 1956), of a company, or is deemed to be a director of that company by virtue of sub-clause (10) of section 307 of that Act or
occupies the position as an officer or an employee of the company or holds a position involving a professional or business relationship between himself and the company [whether temporary or permanent] and who may reasonably be expected to have an access to unpublished price sensitive information in relation to that company.
  • Certain items are sensitive and have an impact on market prices and therefore, ideally are not tabled as these are planned in advance with adequate closure of trading window for all designated persons in order to ensure no false market gets created. Regulation 29 of Listing Regulation, therefore, mandates giving of prior intimation for items viz. financial results, proposal for buy-back, voluntary delisting, fund raising by way of issuance of securities, declaration/ recommendation of dividend and proposal for declaration of bonus securities.
  • Prior intimation of at least two working days in advance (five working days in case of financial results), excluding the date of the intimation and date of the meeting is required to be given to the stock exchange. Simultaneously, trading window closure also has to be ensured at least from the date of notice to stock exchange till 48 hours after the information becomes generally available.

Some of the price-sensitive areas -

  • Financial results: Board meeting dates are pre-fixed especially in case of approval of financial results. Therefore, in case of a listed company, it is unlikely for this item to be a tabled item. The agenda can be adjourned, in case further clarity is required or any other reason, however, the matter can never be a tabled item.
  • Fund raising: Fund raising, by way of issue of securities, requires pre-planning, as there is a need for shareholder’s approval, deciding on terms and conditions, deciding on delegation of powers, timelines for compliance as per applicable regulations etc. It will appear strange if the Board happens to decide on matters for issue of shares/ debentures under ‘any other item with the permission of Chairperson’.
  • Declaring of interim dividend or recommendation of final dividend depends on several factors viz. the financial results, dividend policy, future plans etc. It will be against the spirit of corporate governance if the Board instantly decides to consider dividend proposal. It will equally be against the spirit and intent of corporate governance if the Board approves any proposal in relation to dividend, for e.g. proposal to consider dividend proposal in next Board meeting, without complying with prior disclosure requirements.
  • Exception in case of bonus issue: Proviso to Regulation 29 (1) (f) exempts the requirement of intimation on declaration of bonus securities in case it is not on the agenda of the meeting. Clause 19 (b) of Listing Agreement mandated giving notice simultaneously to the Stock Exchanges in case the proposal for declaration of bonus is communicated to the Board of Directors of the company as part of the agenda papers. Wordings of Reg. 29 (1) (f) are not exactly similar to Clause 19 (b).

Trading on the basis of UPSI

Trading window is required to be closed when the DPs are expected to be in possession of UPSI. The period for which trading window is closed is usually specified in the Code of Conduct framed under Prohibition of Insider Trading (PIT) Regulations. Intimation of trading window closure to stock exchange is not mandatory as closure of trading window is for insiders and not general public. Generally, for financial results, the trading window closure commences from 1st day following end of relevant quarter till 48 hours after the information becomes generally available. For matters other than financial results, the window should be closed from the time UPSI generates. Intimation to stock exchange under Reg. 29 is subsequent. The purpose of intimation is to inform all shareholders about the proposed action of the Company in order to enable them to adjust their holdings. There is no nexus between period of trading window closure and intimation under Regulation 29.

Regulation 29(1) enlists items that are planned in advance as they have significant impact on market sentiments and consequentially, the market price. The higher the chance of variation in market price, the greater is the need to monitor and prohibit insider trading. Therefore, the role of compliance officer becomes onerous to ensure no false market is created and there is timely trading window closure to comply with requirement of law in letter and spirit.

All listed companies are required to abide with the following directions for maintaining confidentiality of UPSI as well as measures to deal with incidents of leakage of price sensitive/ material information.

  • All listed companies to disseminate the material information/event as soon as it become credible and concrete for maintaining information symmetry in the market.
  • Listed companies may choose to disseminate any material information/ events where there is likelihood of crystallization of such events/ information but finality has not been reached.
  • However, listed company may choose not to disclose the same to the Stock Exchanges only if,
  1. Non-Disclosure of such material information/event is in the interest of its stakeholders (for example, impending Joint Ventures, mergers, settlement of only one out of multiple labour disputes, etc.), and
  2. The listed company ensures the confidentiality of such information and that no part of the information is leaked.
  • All listed companies need to ensure strict compliance with Schedule A to the PIT Regulations to put in place processes/systems/controls to ensure that instances of leakage of material, price sensitive information do not occur and wherever possible, material, price sensitive information is disclosed as soon as such information is known with a certain reasonable level of correctness.
  • In line with clause 5 to the schedule A to the PIT Regulations, in the event of rumors noticed in media or on observation of information leakage through any media (including social media), the company shall immediately make appropriate and suitable disclosures through the Stock Exchanges.
  • The listed company shall immediately disclose the confidential/ material information to the Stock Exchanges in circumstances where the confidential/ material information has been inadvertently disclosed/ made known to a third party.




06 Oct, 2018