What is unaffected price? SEBI's rumour pricing rule

Unaffected price is SEBI's answer to a problem its own rumour rules created. If a company must confirm a leaked deal the moment the share price jumps, the jump then feeds into the regulated floor price for that very deal, and the confirmation makes the transaction more expensive. The unaffected price framework lets the company take the spike back out, on one condition: it confirmed the rumour within twenty four hours. This page explains what the framework does and how the calculation works. It is not investment advice.

What does the unaffected price rule actually permit?

The permission comes from a proviso inserted into Regulation 30(11) of the SEBI LODR Regulations, 2015 by the amendment notified on 17 May 2024. Where a company confirms a reported event within twenty four hours from the trigger of material price movement, and the transaction is one whose price is set by any of the pricing norms below, the effect on the share price from the movement and the confirmation may be excluded from the price calculation:

• Chapter V or Chapter VI of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018, which cover preferential issues and qualified institutions placements.
• Regulation 8 or Regulation 9 of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, which set the open offer price.
• Regulation 19 or Regulation 22B of the SEBI (Buy-back of Securities) Regulations, 2018.
• Any other pricing norms specified by SEBI or the stock exchanges.

The exclusion is not automatic across the board. It is available for the transaction the rumour was about.

How the unaffected price is calculated

The method is in the Annexure to SEBI circular SEBI/HO/CFD/CFD-PoD-2/P/CIR/2024/51 dated 21 May 2024, and it works on the volume weighted average price rather than a single day's close.

1. The variation in daily weighted average price from the day of the material price movement until the end of the next trading day after the rumour is confirmed is attributed to the rumour and its confirmation.
2. That variation is then excluded from the daily weighted average price across the look-back period, from the day of the material price movement onward.
3. For the stretch running from the movement to the end of the next trading day after confirmation, the adjusted daily price is set equal to the weighted average price on the trading day immediately preceding the movement.
4. The adjusted volume weighted average price for the look-back period is then computed from those adjusted daily figures.

The circular works this through with a preferential issue to qualified institutional buyers. In its illustration the weighted average price on the day before the movement is Rs 1,060.76, the variation attributed to the rumour is Rs 118.14, and the adjusted series carries the pre-rumour price forward through the confirmation window before resuming.

One refinement covers a runaway price. If the variation after confirmation hits the price band limit on the next trading day, the variation in subsequent trading days is included in the adjustment until a day when the band is not hit.

How long the unaffected price remains usable

The adjusted price is not open-ended. The circular provides that the unaffected price applies for 60 days or 180 days from the date of confirmation of the rumour, depending on the stage of the transaction, with the applicable period specified in the Industry Standards on Regulation 30(11).

It also handles the common case where a deal leaks in stages. If a company confirms a rumour, and later rumours with a material update to the same transaction are reported and require confirmation under Regulation 30(11), the unaffected price applies for each instance of confirmation. The circular illustrates this with a confirmation on 28 July giving an unaffected price usable until 26 September, and a later confirmation on 28 August giving one usable until 27 October, so the relevant date of board approval decides which confirmation a company can rely on.

Who can use it, and from when

The framework applied to the top 100 listed entities from 1 June 2024 and to the top 250, meaning the next top 150, from 1 December 2024. The ranking that decides membership is the exchange list built on average market capitalisation from 1 July to 31 December.

The circular was issued under Section 11(1) and Section 11A of the SEBI Act, 1992 read with Regulation 101 of the LODR Regulations.

Why this matters when reading a filing

The unaffected price is a good example of a disclosure rule with a direct cash consequence, and it changes how two documents should be read together. A rumour confirmation filed inside twenty four hours is not only a governance box ticked. It preserves the company's ability to price a preferential allotment, open offer or buyback off a pre-rumour price. So the timestamp on a rumour verification announcement carries information about the transaction that follows it, and a later pricing disclosure may reference an adjusted figure rather than the market price you can see on screen.

Unaffected price is a documented, formula-driven adjustment, not a discretionary one, which means the inputs are checkable against the exchange price history. Flock reports public filings with every claim sourced and dated. What any of it means for your money is your call to make.