Introduction

In modern capital markets, information travels faster than ever—thanks to social media, online news platforms, and instant messaging. A single leak from a company can swiftly move share prices and trigger intense scrutiny from regulators. This is particularly true for Unpublished Price Sensitive Information (UPSI), which represents non-public, price-moving information about a listed entity. Recent rulings by SEBI and the Securities Appellate Tribunal (SAT), including high-profile cases like Reliance Industries–Facebook, have reinforced that listed entities cannot adopt a “wait and watch” approach when such information emerges. Instead, they must recognise UPSI promptly, manage it carefully, and make timely disclosures in accordance with the PIT Regulations, even when details under SEBI LODR are not yet finalised.

In this article, we will delve into how UPSI is identified, the principles established by SEBI and SAT to determine its existence, and the obligations of listed entities when dealing with selective disclosures, leaks, or market rumours. Through recent orders, this piece provides practical insights for companies on managing UPSI, ensuring compliance, and maintaining market integrity.

What is UPSI

UPSI stands for Unpublished Price Sensitive Information. According to the SEBI (Prohibition of  Insider Trading) Regulations, 2015 (‘PIT Regulations’), UPSI includes any information that:

1. Is not public yet;
2. Can significantly impact the company’s stock price once made public, and
3. Relates directly to the listed entity (in most of the cases).

Common examples include financial results, mergers, fundraising plans, dividend announcements, etc. Recently, the list has been expanded to cover some material events in accordance with Schedule III of SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015 (‘LODR’).

Once something qualifies as UPSI, listed entities are required to take various steps, including making an entry in the Structure Digital Database (‘SDD’), entering into a Non-Disclosure Agreement with the persons privy to the UPSI, closure of trading window, etc.

When Does UPSI Come into Existence?

The answer to this proposition is very subjective and should be decided on a case-by-case basis. Since SEBI outlines no criteria to determine the actual or tentative date when an event comes into being as an UPSI. To better understand the scope, let us take two examples here in relation to raising funds and activities involved therein:

Situation I

Situation II

There are different practices in the industry to determine the date of coming into effect an UPSI like  the day when the proposed transaction reaches to higher level for confirmation such as CEO  before furnishing it to the board of directors or some identifies when due diligence is carried out or valuation is done and some determine the date when shareholder’s agreement is entered into.

In case of Situation I, SEBI has held that UPSI came into effect on Sept 1, 2021, when the engagement letter was signed, marking a serious and structured move toward investor onboarding despite the fact that neither the investor was identified nor any due diligence was even initiated. In this case, SEBI concluded that the execution of the agreement with the consultant to mobilise funds, even if there is no investor in itself, is material information in terms of Regulation 2(1)(n) of PIT Regulations, as this information is generally not available, which is the main ingredients of the definition of UPSI. SEBI laid down this principle in the matter of Shalimar Paints Limited vide its order dated July 25, 2024 and in this case, the CEO was held liable for not identifying the said transaction as an UPSI on that day and thus, not closing the trading window.

In case of Situation II, SEBI laid down a different principle to determine UPSI, as per which to determine UPSI, one should look at the high degree of crystallisation and concreteness of the transaction. Just because there is a chance that a proposed transaction will fall out at any time till it gets final approval from the respective board of directors, an event will not be treated as a UPSI may not be correct. Suppose a UPSI period starts with the day when there is a 100% chance of crystallisation of any transaction going through. In that case, the period will remain for a day maximum when the board of directors approve that transaction and stock exchange disclosure is made and thus, the whole purpose of UPSI gets defeated. For any transaction to happen, many steps are taken, starting from discussions, meetings, a non-disclosure agreement, due diligence to finalisation of the transaction agreement, etc. At the initial stage, a transaction is always exploratory in nature and there is always uncertainty around it however, when it reaches to a level where one can determine that the transaction is reached a higher level and there is also a high probability of its crystallisation, though it is not 100%. In the current Situation II, SEBI concluded that December 20, 2017, till January 18, 2018 was a UPSI period when probability of the transaction to go through was high, even if there were still critical pending points. This was decided by SEBI in case of Biocon Limited wherein collaboration agreement was being entered with Sandoz.

It is to be kept in mind that the above two situations provide only guidance to determine UPSI and UPSI period, and these are not exhaustive situations. One must consider the context of any event occurring within a company, and that event must be “Credible and Concrete”, which means there is a high degree of its crystallisation. In few of the cases, one can find that the event starts from the top level and all other formalities follow, even if there are critical points to discuss amongst deal team of the parties however the UPSI comes into existence from the date when top-level executives started taking. This was held by SAT in the matter of Gammon Infrastructure Projects Ltd., when telephonic discussions started between the CEOs of two companies, unpublished price sensitive information came into existence.

When UPSI is subjected to stock exchange disclosure

The disclosure requirement generally comes from the provisions of SEBI LODR Regulations, however, such disclosure require extensive information like in case of funding event, name of investor, valuation, number of shares to be issued, post shareholding pattern etc. One cannot provide this extensive information when a company identifies an event as a UPSI since the parties are in the process of finalising the transaction.

Principle 1, Schedule A of PIT Regulations, makes it obligatory on the part of listed entity to make prompt disclosure of UPSI, as soon as it comes into being as a concrete and credible information, to make it generally available. However, this does not mean a company is required to disclose every UPSI as soon as it is identified because of two simple reasons, firstly, the full information about the deal is yet to be finalised and secondly, the required approvals haven’t been obtained. If one gives disclosure about the impending deal without clear details, the same would just lead to speculation. Besides Principle 1, principles on disclosure of information are also enshrined under regulation 4 of LODR, wherein a listed company is required to disclose information to stock exchanges which are not misleading or provide any room for speculation. Thus, Principle 1 of PIT should be read in conjunction with the requirement of disclosures under LODR.

Besides above, there is another Principle 4 (‘P4’) which requires prompt dissemination of UPSI when it gets disclosed “selectively, inadvertently or otherwise” to make such UPSI generally available to public at large. P4 casts a duty upon the listed entity to make due disclosure to public at large, in a situation where a select group of persons knows about any UPSI , to avoid creation of  information asymmetry amongst the investors. Thus, on contrary to P1, P4 requires to disseminate an UPSI to the stock exchange where there are leaks or rumours floating in the market whether in any print-media or newspaper even if there are absence of material information about the deal as discussed hereinbefore.

Let’s study one related case to the above, where supremacy of P4 is cleared and upheld:

Situation III

In the above case, a proposal related to investment in the material subsidiary of the listed company  reached to a level where UPSI has come into existence even though the due diligence and valuation was pending. Subsequently the said deal was widely covered in both domestic and international media  since it was between two big conglomerates. The listed entity did not clear air about media reports and decided to stay silent since the impending transaction was not conclusive due to pendency of valuation and due diligence. However, SEBI and then SAT upheld that P4 casts a duty on the company to disclose the UPSI as soon as it reaches to a select group of persons whether inadvertently or otherwise which is creating confusion about the deal. Further the listed entity and its compliance officer averred that the information was not concrete due to pendency of valuation, and the parties did not enter into binding agreement. To this Hon’ble SAT replied, ‘credibility’ about the information could be verified from the fact that the company entered this information into ‘Structured Digital Database’ and secondly, ‘concreteness’ qua information could be substantiated from fact that amount of investment was agreed between the parties and only the figures were to be filled in which may vary based upon the valuation. Above all, the information was reported in renowned and credible newspapers and channels and due to which stock price got a 15% upside. This case is nothing but related to Facebook investment in Reliance Industries Limited’s material subsidiary (i.e. Jio) in the year 2020, wherein SEBI (June, 2022) and then Hon’ble SAT (May 2025) upheld that the company should have disclosed to the stock exchanges when media reports were floating and upheld the supremacy of PIT Regulations over LODR when it comes to any leaks or rumours.