Public M&A: Does SEBI’s Market Rumour Proposal Offer the Much-Needed Price Protection?

February 14, 2024

Key Takeaways

In June 2023, SEBI introduced “rumour verification requirements” requiring listed companies to address market rumours; trigger for “materiality” pegged to “expected impact”on turnover, net worth, or value of profit/loss after tax
SEBI’s December 2023 Consultation Paper now proposes to (a) peg materiality thresholdsto stock and index price movements; and (b) most importantly, offer price protection fordeal-making
Price protection basis market rumour verification is a leap forward as it plugs the price spikedue to premature leakages; though taken a step backwards by making promoters (not just KMPs) liable
SEBI has proposed two methods of price protection: (a) up to 60 days of price protection; or(b)protection from the day of material price movement until the end of the next trading dayafter rumour confirmation
This analysis focuses on the price protection mechanism, and not on “material price movement” thresholds proposed in the Consultation Paper
For an in-depth analysis of the rumor verification regime, please refer to our previouspaper titled “SEBI’s Proposed Disclosure Regime: Impact on Public M&A and Directors’ Liabilities” and our webinar on “Public M&A – Deal-making and Director Liabilities.”

717, Tower B, One BKC, Bandra Kurla Complex,
Mumbai – 400051
contact@resolutpartners.com