The UPSI Characterisation
The SEBI (Prohibition of Insider Trading) Regulations, 2015 define unpublished price sensitive information to include information that, if published, would materially affect the price of the securities. A proposed scheme of arrangement or amalgamation is a classic example: the announcement of a merger moves the share price. The information becomes UPSI when the board decides to explore the scheme, not when the scheme is filed with the NCLT.
The Trading Window Closure
Once the information is UPSI, the compliance officer must close the trading window for all designated persons and their immediate relatives. The closure must be communicated in writing, and the compliance officer should maintain a record of the closure notice and the date of closure. The window may be reopened not earlier than forty-eight hours after the UPSI becomes generally available.
The Notional Trading Window
Where the scheme is at a preliminary stage and the universe of persons in possession of the UPSI is not fully known, the compliance officer may create a notional trading window for the persons directly or indirectly involved in the transaction. The notional window is a containment measure, and the persons covered must be identified and informed.
The Disclosure Timing
The scheme’s announcement must be made under Regulation 30 of LODR once the board approves the scheme. The disclosure should be accurate and complete, and it should not be selective. A premature or selective disclosure can itself be a PIT violation.
The Documentation
The file should contain: the compliance officer’s closure notice; the list of designated persons; the notional window communication; the board resolution approving the scheme; and the Regulation 30 disclosure. A scheme file that does not record the trading window closure is exposed to a PIT enforcement action.
Call to Action: For PIT compliance during a scheme, trading window closure documentation, or UPSI containment strategy, contact office@anujdesaiassociates.com or 9619456656. Website: https://anujdesaiassociates.com. LinkedIn: linkedin.com/in/ca-anuj-desai-122547230.