1. Relates to company or its securities

Is this information about THIS company or its securities (not general market or industry)?

If no → Not UPSI (e.g., general interest rate expectations)

2. Not generally available

Has this information been disclosed to the public on a non-discriminatory basis?

If yes → Not UPSI (information has become GAI)

3. Likely to materially affect price

If this information becomes public, would it LIKELY cause a MATERIAL movement in the company's share price?

If no → Not UPSI (e.g., minor routine business decision with no price impact)

⚠️ 'Likely to materially affect price' — The Standard

The standard is 'LIKELY TO MATERIALLY AFFECT' — not 'will definitely affect' or 'has affected'. A probability standard applies. Information that has a reasonable probability of causing a material price movement qualifies as UPSI. Information that might cause only a marginal price movement may not qualify.

Financial results

Quarterly/half-yearly/annual P&L, balance sheet, cash flow statement before filing with exchanges

Earnings surprise (positive or negative) is the single largest driver of short-term price movements

Dividends

Board decision to declare, modify, or skip dividend before exchange announcement

Dividend changes signal management's confidence in earnings — directly affects share price

Capital structure changes

Decision to issue rights shares, bonus shares; buyback announcement; conversion of instruments

Rights/bonus dilute or concentrate ownership; buyback signals undervaluation — all price-moving

M&A, demergers, acquisitions

Board approval to acquire another company; term sheet signed; due diligence started; merger discussions ongoing

M&A transactions significantly affect target and acquirer valuations — high price sensitivity

Changes in KMP

CEO resignation; new MD appointment; CFO change

Market perception of management quality affects valuation — especially for founder/CEO changes

Material events (LODR)

Major litigation loss; regulatory show-cause notice; product recall; material contract termination

Any event requiring LODR disclosure is by definition material — price impact likely

General macroeconomic data

Not company-specific — relates to the economy, not the company. E.g., RBI rate cut expectations.

Industry-wide trends

Not specific to the company — affects all industry participants equally. E.g., new GST rate applicable to entire sector.

Information already filed with stock exchanges

Has become GAI — non-discriminatory access achieved. E.g., audited annual results filed on BSE/NSE.

Forward-looking guidance if publicly disclosed

If management gives guidance publicly in an investor conference (broadcast/webcast/filing) → GAI.

Publicly available analyst research

Based on public information — even sophisticated analysis does not constitute UPSI if source data is public.

Rumours in public domain

Information widely discussed in media/public domain may have become GAI even without formal disclosure.

Routine business operations

Day-to-day operational decisions not expected to materially affect price — e.g., hiring of 50 mid-level employees.

Filing board meeting outcome with NSE/BSE via exchange system

YES — immediately upon filing, available to all on non-discriminatory basis

Press conference with select media representatives (not broadcast)

NO — not non-discriminatory access; selected media ≠ public

Conference call with analysts before exchange filing

NO — selective disclosure to analysts is NOT GAI

LODR-compliant exchange filing + publication on company website

YES — non-discriminatory access achieved

Leak to specific journalist before exchange filing

NO — still UPSI; journalist becomes an insider

✅ Trading Restriction After Information Becomes GAI

Even after UPSI becomes GAI (filed with exchanges), insiders typically cannot trade immediately. The PIT Regulations' trading window mechanism requires a 'cooling off' period — the market must have had adequate opportunity to absorb and react to the newly published information. SEBI's general guidance: trading can resume after market hours following the day of disclosure.

Early stage M&A discussions (exploratory — no binding terms)

Depends on stage: early-stage exploratory talks may not be UPSI if no reasonable probability of completion. Board-approved due diligence or signed NDA likely = UPSI.

Management's subjective views on likely future results

Internal projections not disclosed publicly may be UPSI if they would materially affect price if known.

Information from a customer about their own business

If a supplier learns from their customer that the customer (listed) is about to make a major loss — could be UPSI about the customer.

Pending regulatory approval/rejection

If the decision is imminent and material — UPSI. If general compliance matter — may not be price-sensitive.

📖 Hindustan Lever Ltd. v. SEBI (1998) 18 SCL 311 (SAT)

Facts: HUL acquired Brooke Bond shares while in possession of information about the HUL-Brooke Bond merger (HUL was a party to the negotiations). SEBI alleged this was insider trading using UPSI.

Held: SAT set aside SEBI's order — the information about the merger did not constitute 'price-sensitive information' under the then-operative 1992 Regulations because it related to a future event whose probability of materialisation was uncertain at the time of trading.

Ratio: Under the 2015 Regulations, this gap is closed — merger/acquisition information (Regulation 2(1)(n)(iv)) is expressly included as UPSI regardless of the stage of negotiations. HUL v. SEBI directly led to the 2015 Regulations' expansive UPSI definition.

📖 SEBI v. Abhijit Rajan (Gammon India Case) SEBI Order, 2015

Facts: The promoter of Gammon India Ltd. sold shares before the announcement of a material adverse event. SEBI examined whether the internal management information about the adverse event constituted UPSI.

Held: SEBI held that internal management information about a material adverse development — known to the promoter but not filed with exchanges — constituted UPSI. The promoter's sale before the public announcement was insider trading. The information clearly passed the three-part UPSI test: company-specific, not generally available, likely to materially affect price.

Ratio: Internal management information about material adverse developments constitutes UPSI once it is company-specific, non-public, and likely price-sensitive — regardless of whether a formal board decision has been made.

UPSI Definition & Application of Three-Part Test

Model Answer — UPSI (Regulation 2(1)(n)): Any information relating to a company/its securities, not generally available, which upon becoming generally available is LIKELY TO MATERIALLY AFFECT the price of securities. Expressly includes: financial results, dividends, capital structure changes, M&A, KMP changes, material LODR events — but the list is inclusive, not exhaustive. The three-part test: (1) relates to company/securities; (2) not GAI; (3) likely material price impact. APPLICATION: Scenario 1 — CFO knows quarterly results (profit down 40%) before filing with exchange. (1) Yes — company financials; (2) Yes — not yet filed with exchange; (3) Yes — 40% profit decline would materially move price. Result: UPSI. Scenario 2 — CEO reads published newspaper analysis predicting the company's results will decline. (2) No — published newspaper = generally available information = GAI. Result: NOT UPSI. Scenario 3 — Board approves acquisition of a large private company (not yet announced). (1) Yes; (2) Yes — board room decision not yet filed; (3) Yes — M&A announcement typically materially affects acquirer and target prices. Result: UPSI. In HUL v. SEBI (SAT 1998), merger information was not UPSI under 1992 Regs — expressly closed by 2015 Regulations which include M&A at ANY stage. In SEBI v. Abhijit Rajan, internal knowledge of adverse developments = UPSI even before formal board decision.

🎯 EXAM POINTERS — Topic 59: UPSI — What Qualifies

• UPSI THREE-PART TEST: (1) Company/security specific; (2) NOT generally available; (3) LIKELY TO MATERIALLY AFFECT price.
• Expressly listed UPSI: financial results; dividends; capital structure; M&A (any stage); KMP changes; material LODR events.
• NOT UPSI: general macroeconomic data; industry trends; already filed information; publicly disclosed guidance.
• GAI: accessible to public on NON-DISCRIMINATORY basis. Exchange filing = GAI. Selective analyst briefing ≠ GAI.
• 'Likely to materially affect' — probability standard; not certainty. Reasonable probability of material price movement.
• Trading window: even after UPSI becomes GAI, insiders wait for market to absorb information before trading.
• Early M&A: exploratory talks may not be UPSI; board-approved due diligence/signed NDA likely = UPSI.
• Internal management info about adverse developments = UPSI even before formal board decision — SEBI v. Abhijit Rajan.
• HUL v. SEBI (SAT 1998): merger info not UPSI under 1992 Regs. PIT 2015 closes this gap — M&A expressly included.
• UPSI list is INCLUSIVE ('ordinarily include but not limited to') — any information meeting three-part test can be UPSI.