Exploratory restructuring plans are not UPSI unless they crystallise into a definite corporate action affecting securities prices.
A mere board-level decision to evaluate corporate reorganisation options does not amount to unpublished price sensitive information unless it has crystallised into a definite proposal likely to materially affect securities prices. On the facts discussed, the record showed only exploratory consideration of demerger or restructuring possibilities, not a final or specific corporate action, so the alleged PSI-6 did not qualify as UPSI. Trades based solely on that non-qualifying information could not support an insider trading finding, and the finding was set aside for appellants whose transactions were confined to PSI-6. The matter was remitted for reconsideration on the remaining issues concerning other appellants.
Issues: (i) Whether the alleged board decision to evaluate reorganisation options concerning the company constituted unpublished price sensitive information. (ii) Whether the findings of insider trading based on trades executed during that period could be sustained against the appellants who traded only on that alleged information period.
Issue (i): Whether the alleged board decision to evaluate reorganisation options concerning the company constituted unpublished price sensitive information.
Analysis: The definition of unpublished price sensitive information requires information that, if published, is likely to materially affect the price of securities, and includes significant changes in policies, plans or operations. A mere decision to evaluate options for reorganisation, without any definite proposal or crystallised decision to demerge, split, or otherwise restructure the company, does not amount to such information. The material on record showed only exploratory consideration and not a final or specific corporate action.
Conclusion: The alleged PSI-6 was not unpublished price sensitive information.
Issue (ii): Whether the findings of insider trading based on trades executed during that period could be sustained against the appellants who traded only on that alleged information period.
Analysis: Where the only alleged basis for the charge is an event that does not qualify as unpublished price sensitive information, trades referable solely to that event cannot sustain the charge of insider trading. On that footing, the trades of the appellants who traded only during PSI-6 could not be upheld. The impugned findings therefore could not stand to that extent.
Conclusion: The finding of insider trading was set aside in relation to the appellants whose trades were confined to PSI-6.
Final Conclusion: The order under challenge was interfered with to the extent it rested on PSI-6, and the matter was sent back for reconsideration on the remaining issues in relation to the other appellants.
Ratio Decidendi: A mere proposal or exploratory decision to consider corporate restructuring does not constitute unpublished price sensitive information unless it has crystallised into a definite corporate action likely to materially affect securities prices.
TaxTMI 
AI Drafter ✕
TaxTMI 
