Definitions under PIT Regulations 2015 — Regulation 2

Topic 57 — UPSI, Insider, Connected Person & Generally Available Information | SEBI Law Officer

Regulation 2 of the PIT Regulations, 2015 contains the definitional framework — the definitions of 'unpublished price-sensitive information' (UPSI), 'insider', 'connected person', and 'generally available information' (GAI) are particularly critical. These definitions determine who is an 'insider', what information triggers the prohibition, and when information ceases to be UPSI upon publication. The interaction between UPSI and GAI is a uniquely important concept that distinguishes the 2015 Regulations from their 1992 predecessor.

1. Regulation 2(1)(n) — 'Unpublished Price Sensitive Information' (UPSI)

Regulation 2(1)(n): 'Unpublished price sensitive information' means any information, relating to a company or its securities, directly or indirectly, that is not generally available which upon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 and shall, ordinarily include but not be limited to, information relating to the following: (i) financial results; (ii) dividends; (iii) change in capital structure; (iv) mergers, de-mergers, acquisitions, delistings, disposals and expansion of business and such other transactions; (v) changes in key managerial personnel; and (vi) material events in accordance with the listing agreement / LODR.

Analysis of the UPSI definition — four elements:

'Relating to a company or its securities': The information must be about the company or its securities — not general market or industry trends.
'Not generally available': The information must be unpublished — not yet in the public domain. Once published, it becomes GAI and ceases to be UPSI.
'Upon becoming generally available, likely to materially affect the price': The price-sensitivity test — the information must be such that if made public, it would materially affect the price of the securities.
Inclusive list — not exhaustive: The six categories listed are examples ('ordinarily include but not be limited to') — other information that meets the three-part test also qualifies as UPSI.

Category	Examples of UPSI
Financial results	Quarterly/annual results before publication; trading updates; revenue guidance
Dividends	Board decision on dividend declaration before announcement to exchanges
Change in capital structure	Decision to issue rights shares, bonus shares, buyback, ESOPs before announcement
M&A, demergers, acquisitions	Board/management decision to merge, acquire, delist, dispose of business before announcement
Changes in KMP	CEO/MD/CFO resignation or appointment before announcement
Material events (LODR)	Any event requiring immediate LODR disclosure — contractual disputes, regulatory actions, defaults

2. Regulation 2(1)(e) — 'Generally Available Information' (GAI)

Regulation 2(1)(e): 'Generally available information' means information that is accessible to the public on a non-discriminatory basis.

GAI is the conceptual opposite of UPSI. Once UPSI becomes 'generally available', it ceases to be UPSI and trading can resume. Key features of GAI:

Non-discriminatory access: The information must be accessible to ALL persons equally — not just a privileged subset. If a company shares results with a select group of analysts before exchange filing, that information is NOT GAI even if technically 'disclosed'.
Stock exchange dissemination: Filing of financial results, board decisions, and material events with the stock exchanges (through LODR) constitutes public dissemination — making the information GAI.
When does information become GAI?: When it is filed with the stock exchange AND a reasonable time has passed for it to disseminate to the public — typically the next trading day after the filing.

3. Regulation 2(1)(g) — 'Insider'

Regulation 2(1)(g): 'Insider' means any person who is: (i) a connected person; or (ii) in possession of or having access to unpublished price sensitive information.

The 'insider' definition in the 2015 Regulations is critically broader than the 1992 definition. Two alternative categories:

Category 1 — Connected Person: Any 'connected person' as defined in Regulation 2(1)(d) is DEEMED to be an insider — even if they do not actually possess UPSI at the time of trading. Connected persons are presumed to have access to UPSI.
Category 2 — Possession of UPSI: ANY person (whether connected to the company or not) who is in possession of or has access to UPSI is an 'insider'. This captures outsiders — lawyers, investment bankers, journalists, consultants — who have received UPSI.

⚠️ 'Possession' vs 'Knowledge'

The 2015 Regulations prohibit trading while 'in possession of' UPSI — a broader standard than 'knowing' UPSI. A person who has received a document containing UPSI but has not read it may still be 'in possession' of UPSI. This strict approach is intended to prevent technical defences based on claimed ignorance of information that was available to the person.

4. Regulation 2(1)(d) — 'Connected Person'

Regulation 2(1)(d): 'Connected person' means any person who is or has during the six months prior to the concerned act been associated with a company, directly or indirectly, in any capacity including by reason of frequent communication with its officers; or by being in any contractual, fiduciary or employment relationship; or by being a director, officer or an employee of the company or holds any position including a professional or business relationship between himself and the company whether temporary or permanent.

The connected person definition is very wide — intentionally so:

Six-month look-back: A person who WAS connected to the company in the 6 months BEFORE the relevant act remains a 'connected person' even if their connection has since terminated. An employee who resigned 3 months ago remains a connected person.
Any capacity: Directors, officers, employees, consultants, lawyers, chartered accountants, bankers, advisers, journalists with frequent communication — ALL are connected persons.
Deemed connected persons: Regulation 2(1)(d) also lists deemed connected persons — promoters; KMP; directors; persons with frequent access to company officers; immediate relatives of all the above.

5. Deemed 'Connected Persons' — Regulation 2(1)(d) Explanation

Category	Examples
Company insiders	Director, KMP (CEO, CFO, CS), whole-time director, managing director
Company employees	Any employee — including junior employees who may have access to UPSI
Professional advisers	Auditors, legal advisers, investment bankers, merchant bankers advising on transactions
Contractual counterparties	Persons in any contractual relationship — consultants, contractors, vendors with access to company information
Fiduciaries	Trustees, fund managers managing funds with company information
Relatives of the above	Immediate relatives of all the above — parents, spouse, children
Six-month ex-employees/advisers	Former employees/advisers who were connected in the 6 months prior to the relevant act

6. What DOES NOT Qualify as UPSI

Not all non-public information is UPSI. The information must be 'price-sensitive' — likely to materially affect the price of the securities if made public. The following typically do NOT constitute UPSI:

Information Type	Why Not UPSI
General industry trends	Not specific to the company; does not 'relate to a company or its securities'
Publicly available financial analysis	Even if insightful — if based on public information, it is not UPSI
Routine business operations	Day-to-day operational decisions that are not material and do not affect price
Information already filed with exchanges	Once filed with stock exchanges = GAI; no longer UPSI
Forward-looking management guidance (publicly given)	If disclosed to the public non-discriminatorily = GAI; not UPSI

7. UPSI — Material Price Impact Test

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

Facts: HUL acquired Brooke Bond shares before the public announcement of the Brooke Bond-Lipton merger. SEBI alleged this was insider trading using UPSI about the merger.

Held: SAT set aside SEBI's order — holding that the information about the merger (known to HUL as it was a party to the negotiations) did not constitute 'published price sensitive information' in the context of the 1992 Regulations. The case raised fundamental questions about what constitutes UPSI.

Ratio: This landmark case exposed the definitional weaknesses in the 1992 Regulations — directly leading to the comprehensive review and eventual replacement by PIT 2015. Under the 2015 Regulations, merger information (Regulation 2(1)(n)(iv)) is expressly listed as UPSI — closing this gap.

8. Model Examination Questions

Q1. Define 'UPSI', 'insider', and 'connected person' under the PIT Regulations 2015. How do they differ from the 1992 definitions?

PIT 2015 Definitions — UPSI, Insider & Connected Person

Model Answer — 'UPSI' (Regulation 2(1)(n)): 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 securities. Includes (not exhaustively): financial results, dividends, capital structure changes, M&A transactions, KMP changes, material LODR events. Contrast with GAI (Regulation 2(1)(e)): information accessible to the public on a non-discriminatory basis — filing with stock exchange constitutes GAI. 'Insider' (Regulation 2(1)(g)): (i) a connected person; OR (ii) any person in possession of or having access to UPSI. Significantly broader than 1992 definition — outsiders who receive UPSI are insiders under 2015. 'Connected person' (Regulation 2(1)(d)): any person who is or has been (within 6 months) associated with a company in ANY capacity — director, KMP, employee, consultant, lawyer, CA, banker, fiduciary. Deemed connected persons include immediate relatives. Six-month look-back captures former employees/advisers. Key difference from 1992: 'insider' now includes ANYONE in possession of UPSI — not limited to formally 'connected' persons. UPSI definition now expressly includes merger information, KMP changes, material events (closing the HUL v. SEBI gap). GAI concept introduced — clear demarcation of when UPSI ceases.

🎯 EXAM POINTERS — Topic 57: PIT Definitions [Regulation 2]

UPSI Regulation 2(1)(n): Three-part test — (1) relates to company/securities; (2) NOT generally available; (3) upon publication, LIKELY TO MATERIALLY AFFECT price.
UPSI list: financial results; dividends; capital structure changes; M&A; KMP changes; material LODR events — INCLUSIVE, not exhaustive.
GAI Regulation 2(1)(e): Information accessible to the public on NON-DISCRIMINATORY BASIS.
Filing with stock exchange = GAI (non-discriminatory access). Selective analyst briefing BEFORE exchange filing ≠ GAI.
Insider Regulation 2(1)(g): (i) Connected person OR (ii) ANY PERSON in possession of UPSI. Two alternative categories.
Connected person Regulation 2(1)(d): any person connected in ANY CAPACITY + SIX-MONTH LOOK-BACK for past connections.
Connected person includes: directors, KMP, employees, consultants, lawyers, CAs, bankers, fiduciaries + their immediate relatives.
2015 Regulations broader than 1992: outsiders who receive UPSI = insiders; merger information expressly UPSI.
HUL v. SEBI (1998 SAT): merger information not UPSI under 1992; this gap expressly closed in 2015 Regulations.
'In possession of' UPSI = broader than 'knowing' UPSI — strict standard; technical ignorance defence limited.

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