What is the meaning of UPSI?
Reg. 2(1)(n) the SEBI (Prohibition of Insider Trading) Regulations, 2015 ("PIT Regulations") defines UPSI which is an inclusive definition and includes certain information as financial results, dividends, change in capital structure, mergers, de-mergers, acquisitions, delistings, disposals and expansion of business and such other transactions, changes in KMP.
As per this definition, UPSI means any information, relating to a company or its securities, directly or indirectly, that is not generally available which upon becoming generally available, is likely to materially affect the price of the securities.
Here, the meaning of generally available information means information that is accessible to the public on a nondiscriminatory basis.
What is KMP?
Sec2(51) of The Companies Act 2013 “key managerial personnel”, in relation to a company, means—
(i) the Chief Executive Officer or the managing director or the manager;
(ii) the company secretary;
(iii) the whole-time director;
(iv) the Chief Financial Officer;
(v) such other officer, not more than one level below the directors who is in whole-time employment, designated as key managerial personnel by the Board; and
(vi) such other officer as may be prescribed;
UPSI can be shared only for legitimate purposes else it has to be kept undisclosed.
For better clarity lets have a look on below cases where the company/KMP violated this :
Indiabulls Ventures Ltd.
In this case, the executive director of Indiabulls was accused of making Rs. 87 lakhs unlawfully by trading in Indiabulls when they had access to unpublished secret information of sale of land and property privately which is the subsidiary of Indiabulls venture limited.
According to the regulator, the executive director of the Indiabulls venture limited was in the management committee of the Indiabulls, therefore she was an insider and her husband too was an insider. These unlawful gains were made in the year from 2017-19.
Penalty : Pia Johson (NED of IVL) and mehul Johnson (Spouse)- Rs 87,21,918.55 (69,09,237.50+ interest of 18,12,681.05)
P.C. Jewellers Case
Corporate announcement (of buyback) and subsequent developments. SEBI noted that late Padam Chand and Balram Garg communicated UPSI (Unpublished Price Sensitive Information) about the proposal for buyback of equity shares and its subsequent withdrawal to Shivani Gupta, Sachin Gupta, Amit Garg and QDPL.
Shivani Gupta, Sachin Gupta, Amit Garg (relative of Chairman and MD of PC Jewellers) and group co-impounding order of Rs 8.3 crore approx.
Happy Reading..!!!
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