Sebi's new guidelines on market rumour to help in fair pricing of M&A, other transactions: Experts

SEBI's new guidelines aim to mitigate stock price impacts from market rumours, ensuring that prices used in M&A, buybacks, and other transactions are not artificially influenced by speculation. Market rumours about a company's business, such as management changes or financial health, can cause significant stock price volatility, leading to transactions that don't reflect true value. \r

SEBI's framework addresses this by determining the "unaffected price" – the stock price before the rumour surfaced – and using it for transactions unless the rumour caused subsequent price fluctuations. The adjusted Volume Weighted Average Price (VWAP) will exclude variations attributable to rumours, ensuring the stock's value reflects pre-rumour levels. This helps exclude price disruption while determining acquisition prices. \r

Under the Listing Obligations and Disclosure Requirements (LODR) Regulations, unaffected prices are considered for transactions where pricing norms apply, provided the rumour is confirmed by the company within 24 hours of a significant price movement. This prompt confirmation curbs speculation and provides clarity to investors. The requirement will apply to the top 100 listed companies from June 1 and the top 250 listed entities from December 1.