SEBI Enhances Disclosure Norms On Encumbered Shares
SEBI headquarters in Mumbai (Photographer: Santosh Verma/Bloomberg). 

SEBI Enhances Disclosure Norms On Encumbered Shares

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Promoters will have to make additional disclosures on encumbered shares, the Securities and Exchange Board of India said on Wednesday.

The details are required to be furnished in addition to the already mandated disclosures on encumbrance of shares, invocation of encumbrance and release of the same.

The promoter of every listed company shall specifically disclose detailed reasons in a prescribed format for encumbrance if the combined encumbrance by the promoter along with Persons Acting in Concert with him exceeds 50 percent of their shareholding in the company or 20 percent of the total share capital of the company, the market regulator said in a circular.

Such encumbrance should be disclosed within two working days to the company and the exchanges where the shares are listed, it added.

Those promoters along with PACs whose existing combined encumbrance in the company either exceeds 50 percent of their shareholding in the firm or accounts for 20 percent or more of total holding in the company on Sept. 30, “shall specifically make first disclosure with detailed reasons for encumbrance in the format provided by Oct. 4, 2019”, it said.

The regulator also directed stock exchanges to maintain and separately disseminate the list of such companies along with details of encumbrance and reasons for encumbrance on their websites.

The listed companies shall upload the report on their websites regarding disclosure of reasons for encumbrance within two working days on receipt of such disclosures, SEBI said.

“The provisions of this circular shall come into effect from Oct. 1,” the market watchdog said.

Also read: SEBI Plans Up To Rs 1 Crore Reward, Hotline Access For Informers Of Insider Trading

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