Key Points- SEBI's New Framework for Unaffected Price Consideration: Key Compliance Updates for Listed Entities

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The Securities and Exchange Board of India (SEBI) has issued a circular regarding the framework for considering the unaffected price of transactions following the confirmation of market rumors. This framework applies specifically to material price movements and the subsequent verification of such rumors by listed entities.

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Key Points for Regulatory Compliance Exams

Regulation Reference: 

• The circular references Regulation 30(11) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended in 2024.

Verification of Market Rumors:

• Listed entities are required to verify market rumors when there is a material price movement.
• The stock exchanges will provide a framework for identifying material price movements on their websites.

Unaffected Price Consideration:

• Unaffected price is the price considered for transactions subject to SEBI or stock exchange pricing norms, excluding the impact of the material price movement and the rumor confirmation.
• Rumors must be confirmed within 24 hours of the material price movement trigger for the unaffected price to be applicable.

Implementation Timeline:

• The framework applies to the top 100 listed entities starting June 01, 2024.
• It extends to the top 250 listed entities (including the next 150) from December 01, 2024.

Responsibilities of Stock Exchanges:

• Stock exchanges are instructed to inform their listed entities about the contents of the circular and ensure compliance.

Legal Authority:

• This circular is issued under the powers conferred by Section 11(1) and 11A of the SEBI Act, 1992, and Regulation 101 of the LODR Regulations.

Availability:

• The circular is available on the SEBI website under the 'Legal → Circulars' section.

Compliance Considerations:

• Market Rumors: Be vigilant about monitoring and verifying market rumors, especially when there is a significant price movement.
• Timeliness: Ensure that any rumors are confirmed within the specified 24-hour period to apply the unaffected price.
• Framework Adherence: Follow the specific framework provided by stock exchanges for identifying and responding to material price movements.
• Scope of Application: Understand the phased implementation dates and ensure compliance based on the entity's listing status (top 100 or top 250).

This circular highlights the importance of transparency and timely verification of information to maintain market integrity and protect investors.

LINK: https://www.sebi.gov.in/legal/circulars/may-2024/framework-for-considering-unaffected-price-for-transactions-upon-confirmation-of-market-rumour_83483.html

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