Confidentiality agreements for UPSI shared in due diligence
The agreement a listed company takes from a party that receives unpublished price sensitive information for a legitimate purpose, such as a transaction due diligence.
Agreement before the information is shared
Counted from sharing unpublished price sensitive information for a legitimate purpose, such as a transaction due diligence
- SEBI
- Insider trading and takeovers
- Not specified
- 2026-09-01
The duty is triggered by the sharing, not by a date. PIT Reg 3(4) requires a person who receives unpublished price sensitive information under Reg 3(3) to keep it confidential, except for the purpose it was shared for, and to comply with the PIT Regulations. In practice the listed company takes a confidentiality and non-disclosure agreement before the information goes out, and makes the corresponding structured digital database entry at the same time.
Deadlines counted from an event
Take the confidentiality and non-disclosure undertaking before the unpublished price sensitive information is shared. Reg 3(4) puts a confidentiality duty on the recipient and requires the recipient to comply with the PIT Regulations; it names no period, so the practical timing is 'before sharing' rather than a computed date.
The rule
Take the confidentiality and non-disclosure undertaking before the unpublished price sensitive information is shared. Reg 3(4) puts a confidentiality duty on the recipient and requires the recipient to comply with the PIT Regulations; it names no period, so the practical timing is 'before sharing' rather than a computed date.
Who must comply
- A listed company sharing unpublished price sensitive information for a legitimate purpose under Reg 3(3)
- Any party receiving that information, including an acquirer, an investor or an adviser conducting due diligence
Statutory basis
Before you file
- Confirm that the sharing is for a legitimate purpose under Reg 3(3).
- Identify each individual on the recipient side who will see the information.
- Prepare the confidentiality and non-disclosure agreement.
- Prepare the structured digital database entry for the same sharing.
How to file
- Get the confidentiality agreement signed before the information is shared.
- Tell the recipient that they are now an insider under the PIT Regulations.
- Record the sharer, the recipient and the nature of the information in the structured digital database.
- Do not file the agreement with SEBI or an exchange. Keep it with the transaction file.
If you miss it
A recipient who breaches the confidentiality duty and trades falls under section 15G of the SEBI Act at ₹25 crore or three times the profit made, whichever is higher. A company that shared the information without the safeguards Reg 3 requires falls under section 15HB at up to ₹1 crore.
- The sharing has to be in the structured digital database whether or not the agreement was taken, so an undocumented due diligence usually produces both a Reg 3(4) and a Reg 3(5) allegation
- Where the transaction is an open offer, the same information usually triggers a public announcement duty under SAST
Recent changes affecting this
Common questions
Does a confidentiality agreement make the sharing lawful?
It is one part of it. The sharing itself has to be for a legitimate purpose under Reg 3(3), the recipient has to be told they are an insider, and the sharing has to go into the structured digital database. The agreement records the Reg 3(4) confidentiality duty.