SEBI’s 2025 Insider Trading Amendment: Expanding the UPSI Framework

Introduction

The Securities and Exchange Board of India (‘SEBI’) notified the Securities and Exchange Board of India (Prohibition of Insider Trading) (Amendment) Regulations, 2025. The amendment was introduced through a notification[i], under the powers conferred by s. 30, read with ss. 11(2)(g) and 12A(d) and (e) of the SEBI Act, 1992. This amendment, which takes effect 90 days from its publication in the Official Gazette (i.e., on 09.06.2025), significantly expands the scope of Unpublished Price Sensitive Information (‘UPSI’). By refining key definitional thresholds and codifying new categories of disclosures, SEBI seeks to address evolving corporate practices, enhance accountability, and further mitigate the misuse of insider information.

 Key Amendments

1. Widening the Definition of Material Events as UPSI: The main highlight of the 2025 Amendment is the substantial expansion of Regulation 2(1)(n) of the SEBI (Prohibition of Insider Trading) Regulations, 2015. Previously, this clause provided a non-exhaustive list of events deemed to be UPSI. The amended regulation introduces several new categories, thereby codifying instances that demand prompt disclosure due to their likely impact on securities prices.

Key Additions to Clause (n):

• Sub-clause (iv): Now explicitly includes award or termination of orders/contracts not in the normal course of business. This addition captures disruptions in supply chain contracts, service agreements, or material procurement arrangements that were earlier open to interpretation.

• Sub-clause (v): Now requires disclosure of the resignation of statutory or secretarial auditors, in addition to changes in key managerial personnel (KMPs) not due to superannuation or end of term. This change acknowledges that resignations of auditors may indicate underlying corporate distress and warrant prompt disclosure.

New Sub-Clauses Introduced:

• (vi) Rating Changes: Except ESG ratings, any alteration in credit rating is now deemed UPSI.

• (vii) Fundraising: Disclosure is required when any fundraising activity is proposed, reinforcing SEBI’s emphasis on pre-emptive transparency.

• (viii) Strategic Agreements: Agreements that impact management or control, regardless of their nomenclature, must now be disclosed.

• (ix) Corporate Wrongdoing or Arrests: Any fraud, default, or arrest involving the company, promoters, directors, KMPs, or subsidiaries (whether in India or abroad) now constitutes UPSI.

• (x) Resolution Plans and Settlements: This includes loan restructuring, resolution plans, or one-time settlements with financial institutions.

• (xi) Insolvency and Bankruptcy Proceedings: Admission of winding-up petitions or CIRP applications under the IBC, including their approval or rejection, is now reportable.

• (xii) Forensic Audits: Both initiation and receipt of final reports of forensic audits aimed at uncovering financial irregularities are brought within UPSI.

• (xiii) Regulatory or Judicial Actions: Any orders or actions by regulatory, enforcement, or judicial bodies against the company or related entities must be disclosed.

• (xiv) Material Litigation Outcomes: Litigations that may impact the company are now explicitly included.

• (xv) Third-Party Guarantees: Provision of guarantees, indemnities, or suretyships outside the ordinary course must be reported.

• (xvi) Licensing and Regulatory Approvals: Grant, withdrawal, surrender, cancellation, or suspension of key licenses or approvals must be disclosed.

These additions formalise several grey areas and provide a more structured mechanism for interpreting UPSI in line with global best practices.

2. Clarificatory Notes on ‘Fraud’ and ‘Default’: To avoid interpretational inconsistencies, Explanation 1 to sub-clause (ix) clarifies:

• ‘Fraud’ shall be as defined under SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, 2003.

• ‘Default’ shall carry the same meaning as in the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

3. Guidance on Materiality and Identification of UPSI: Explanation 2 mandates that materiality be assessed using SEBI’s extant guidelines on UPSI under the LODR Regulations. These guidelines shall guide listed entities in recognizing when the newly enumerated events trigger disclosure obligations under insider trading rules.

4.  Structured Digital Database: Two-Day Reporting Window: An important compliance requirement under Regulation 3 is the maintenance of a structured digital database for tracking UPSI access. The 2025 amendment inserts a proviso stating that for information not emanating from within the organization, entities are permitted a window of two calendar days from the date of receipt to record such information. This offers practical flexibility, especially where third-party disclosures are involved.

5. Trading Window Closure Not Mandatory for External UPSI: Schedule B, Clause 4, now includes a new proviso that where the UPSI originates outside the listed company, there is no mandatory requirement to close the trading window. This balances compliance with the practicalities of information flow, especially during complex transactions involving third parties.

Conclusion

SEBI’s 2025 amendment marks a decisive evolution in India’s insider trading regulatory landscape. By extending the scope of events covered under UPSI, incorporating precise definitional guidance, and aligning timelines for recording third-party data, the amendment aims to bridge practical enforcement gaps that have become increasingly visible in contemporary capital markets. This regulatory recalibration is both preventive and strategic, positioning India’s capital markets closer to international disclosure norms. This amendment is not merely a procedural update, and it is a strong regulatory signal that corporate opacity will no longer enjoy regulatory leniency.

End Note

[i] F. No. SEBI/LAD-NRO/GN/2025/235 dated 11.03.2025.

Authored by Manmohan Bhola, Advocate at Metalegal Advocates. The views expressed are personal and do not constitute legal opinions.