07 Jun 2024
In May 2024, SEBI revised its rules on verification of market rumours by listed companies, with an eye on offering better price protection to public M&A deals. This update discusses the key features and impact of the new framework.
The Securities and Exchange Board of India (SEBI) released a new ‘rumour verification‘ framework on 21 May 2024. This follows industry criticism of SEBI’s initial proposal from July 2023, which mandated large listed companies to confirm or deny media reports relating to an ‘impending specific material event‘.
While intended to promote information parity in the market, this requirement raised concerns about unintended consequences for public M&A deals. SEBI’s takeover code uses the pre-deal stock price (in the time leading up to deal signing) to determine the price for an open offer. Similar pricing rules apply to private placements of shares in listed companies, and to share purchase transactions between an Indian resident and a non-resident. Premature deal disclosures may distort stock prices affecting price certainty for acquirors. The new framework aims to address this concern.
The new rules require the 250-largest listed companies to address market rumours about an ‘impending specific event‘ which also causes a ‘material price movement‘ in the stock. A material price movement is an intra-day variation of more than 3–5% in the stock price, after adjusting for any meaningful movement in the benchmark index. The rumour must be addressed within 24 hours from the material price movement.
Download PDF to read more
International Trade Quarterly Milestones (January-March 2026)
17 Apr 2026
Revisiting minimum public shareholding and minimum public offer requirements: The SCRR Amendments, 2026
15 Apr 2026Competition Quarterly Milestones (January-March 2026)
15 Apr 2026If you would like to receive content directly in your inbox from our knowledge repository, please complete this subscription form. This service is reserved for clients and eligible contacts.
Under the rules of the Bar Council of India, Trilegal is prohibited from soliciting work or advertising in any form or manner. By accessing this website, www.trilegal.com, you acknowledge that:
We prioritize your privacy. Before proceeding, we encourage you to read our privacy policy, which outlines the below, and terms of use to understand how we handle your data:
For more information, please read our terms of use and our privacy policy.
