On July 24, 2020, the Securities and Exchange Board of India (“SEBI”) issued a circular vide Circular No. SEBI/HO/MRD2/DDAP/CIR/P/2020/137 dated July 24, 2020 (“Circular”) in respect of recording of encumbrances in depository system in order to further streamline the process of disclosure of promoters of a company with respect to the recording of all types of encumbrances.
Pursuant to the Circular, it has now been decided that depositories shall put in place a system for capturing and recording all types of encumbrances, which are specified under Regulation 28(3) of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, as amended from time to time. Further, depositories have been directed to follow the processes and other norms similar to that, stipulated for the purpose of capturing and recording NDUs in depository system, which shall be apart from pledge and hypothecation, whose processes and specific norms are separately provided in SEBI (Depositories & Participants) Regulations, 2018 and circulars issued thereon.
By way of the aforesaid Circular, SEBI has allowed the depositories to implement the provisions of this circular within one month from the date of this circular and depositories have been advised to make amendments to the relevant bye-laws, rules and regulations for the implementation of the above decision and such other changes as may be necessary.
Please find a copy of the Circular here.
This update has been contributed by Pooja Chakrabarti (Partner) and Kiran Sharma (Associate).
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