[Opinion] Whether Regulatory Approvals Would Be Considered as Unpublished Price Sensitive Information?

CS Vallabh M Joshi – [2024] 168 taxmann.com 86 (Article)

1. Background

Unpublished Price Sensitive Information [‘UPSI’] is any event or information which, when publicly available, would affect the price of the securities of the company materially. Certain events or information undertaken by listed entities require approval of regulators or financial institutions or third-party approvals under a contractual arrangement. These approvals are sometimes taken post-approval of the transaction or event by members of the company in a general meeting. The question that arises is whether the process of receipt of these approvals would be considered as UPSI even when it is already disclosed to members that the event or transaction is subject to approval.

2. Introduction

Regulatory approval in the nature of a no objection certificate, regulatory approvals for the launch of the product, removal of sanctions on products produced in a factory, etc., are required by the listed entity in a particular field in order to carry on a particular transaction or event. It always not confirmed or certain that the regulatory approvals would be received or not?

Non-receipt of regulatory approvals would lead to non-completion of transactions or events that are undertaken by the listed entity. This would certainly have a material impact on the listed entity and its share price consequently.

So even when the shareholders were made aware that a particular transaction or event is subject to regulatory approval or third-party approval, the receipt or rejection of approval will still be considered as UPSI as there is no certainty with respect to receipt of approvals.

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