The Securities and Exchange Board of India (SEBI) introduced significant amendments to the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015 (PIT Regulations) on 11 March 2025, which shall come into effect on 9 June 2025. These amendments clarify the wide ambit of the definition of unpublished price-sensitive information (UPSI) and create more flexibility for companies receiving externally sourced information.

Expansion of the Scope of UPSI

The changes respond to concerns that companies were narrowly interpreting UPSI, focusing only on explicitly listed events rather than broader material impacts.

Under Regulation 2(1)(n) of the PIT Regulations, the definition of UPSI now includes 11 additional subclauses i.e., (vi) to (xvi) which are summarized below:

1. Ratings Revisions: Changes in credit ratings (excluding ESG ratings) that could materially affect securities prices.
2. Fund-Raising Proposals: Decisions to raise capital through instruments like debt or equity.
3. Management/Control Agreements: Any agreement (by any name) impacting a company’s management or control structures.
4. Fraud, Defaults, or Arrests: Fraud/ Default by the company, promoters, directors, subsidiary, or key managerial personnel (KMPs), or their arrests (domestic or international).
5. Loan Restructuring: Resolution plans, restructuring, or one-time settlements for bank borrowings.
6. Insolvency Proceedings: Winding-up petitions, applications under the Insolvency and Bankruptcy Code, 2016 (IBC), and outcomes of corporate insolvency resolution processes.
7. Forensic Audits: Initiatives to start financial audits, detect financial misstatements, misappropriation, or fund diversion, including final audit reports.
8. Regulatory Actions: Orders or actions by domestic/international authorities against the company, its directors, KMPs, promoters, or subsidiaries.
9. Litigation Outcomes: Material impacts from ongoing disputes or litigation.
10. Non-Normal Course Guarantees: Indemnities or suretyship for third parties outside standard business practices.
11. Regulatory Approval Changes: Grants, withdrawals, or suspensions of key licenses or approvals.

Modifications to Existing Provisions

1. Regulation 2(1)(n)(iv) of the PIT Regulations now explicitly covers awards or terminations of contracts/orders not in the normal business course.

2. Regulation 2(1)(n)(v) of the PIT Regulations clarifies that changes in KMPs are UPSI only if they arise from reasons other than superannuation, term completion, or resignations of statutory/secretarial auditors

These amendments harmonize UPSI definitions under the PIT Regulations with the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR Regulations) as the materiality guidelines in both Paragraphs A and B of Part A, Schedule III of the LODR Regulations including any future updates by the Board, shall also apply.

Deferred Database Entry

Post-amendment a new proviso under Regulation 3(5) of the PIT Regulations will allow the companies to enter externally sourced UPSI into structured digital databases within two calendar days of receipt.

Trading Window Exemptions

As per the new proviso under Clause 4(1) of Schedule B of the PIT Regulations trading windows need not be closed for externally sourced UPSI.

MHCO Comments

The 2025 amendments evolving the scope of UPSI underscores SEBI’s focus on combating unethical practices and signify SEBI’s commitment to a robust regulatory framework that adapts to evolving market risks. Further, the harmonization of UPSI definitions under the PIT Regulations with the materiality guidelines in LODR Regulations ensures consistency across regulatory frameworks, reducing ambiguity for listed companies in identifying and disclosing price-sensitive information.

This update was released on 19 Mar 2025.

The views expressed in this update are personal and should not be construed as any legal advice. Please contact us directly on +91 22 40565252 or legalupdates@mhcolaw.com for any assistance.

Legal Update Team
MANSUKHLAL HIRALAL & COMPANY
Advocates, Solicitors and Notaries
T: +91 22 40565252
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