The Securities and Exchange Board of India (SEBI) has proposed broadening the scope of what counts as Unpublished Price Sensitive Information (UPSI). SEBI’s goal is to ensure that investors have access to critical information that can impact stock prices, making it easier to make informed decisions.
Currently, UPSI includes any information not publicly available that could affect a company’s stock price. However, SEBI’s recent consultation paper suggests adding several new types of information to this list. The suggested revisions include incorporating fundraising efforts, revising organizational strategies, and implementing one-time settlements with banks. According to SEBI, such updates will help investors by offering a clearer picture of a company’s financial state and future plans.
One of the major updates SEBI suggests is to classify proposed fundraising as UPSI. While past rules did not count potential fundraising as price-sensitive, SEBI’s updated guidelines would include any plans a company has to raise funds. This change means investors would be promptly informed of any moves to strengthen a company’s financial position.
Restructuring plans are also being recommended as part of UPSI. This includes any major decisions to restructure the company, like merging divisions or cutting down on unprofitable areas. SEBI believes that restructuring decisions can have a big impact on a company’s operations and financial future, so it’s important for investors to know about them right away.
In addition, SEBI suggests that actions by regulatory or judicial bodies, like significant fines, penalties, or sanctions, should be treated as price-sensitive. Such events can influence the company’s image, finances, and operations, making it important information for investors.
Another important inclusion in the suggested UPSI list is forensic audits. SEBI has suggested that companies disclose if they undergo forensic audits, especially if these audits relate to financial misstatements or misuse of funds. Any outcome from these audits, if significant, should also be disclosed. Such transparency would protect investors from unknowingly investing in companies with undisclosed financial issues.
Contracts are also in focus under SEBI’s proposed changes. If a company wins or loses a major contract, or makes significant changes to existing agreements, this should be disclosed as UPSI. Large contracts can affect revenue projections, while contract cancellations or amendments can raise questions about the company’s stability.
In the same vein, SEBI recommends that companies disclose any changes to essential licenses or approvals. If a license necessary for operations is granted, withdrawn, or suspended, SEBI believes that this could significantly impact the company’s performance and should be classified as UPSI.
SEBI is asking the public to weigh in on these proposals by November 30, 2024. By broadening UPSI requirements, SEBI aims to improve regulatory clarity and strengthen market fairness, giving investors access to more information that could impact their investment decisions.
These changes reflect SEBI’s ongoing commitment to transparency and investor protection, ensuring that all investors have the information they need to make sound financial choices.
