Sebi enhances disclosure norms on encumbered shares

Promoters will have to make additional disclosures on encumbered shares, markets regulator Sebi 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 (PACs) with him exceeds 50 per cent of their shareholding in the company or 20 per cent of the total share capital of the company, Sebi 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 per cent of their shareholding in the firm or accounts for 20 per cent or more of total holding in the company on September 30, 2019, "shall specifically make first disclosure with detailed reasons for encumbrance in the format provided by October 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 October 01, 2019", the Securities and Exchange Board of India (Sebi) said.