Following its decision at a board meeting held on January 21, SEBI, vide a notification dated 28th January, 2009, has come out with the norms for disclosure about pledged promoter shares. Certain amendments have been made to the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997.
The promoter should within seven working days of commencement of this amendment, should disclose the details of shares of that company pledged by him, if any, to that company.
The promoter should within 7 working days from the date of creation of pledge on shares of that company held by him or from the date of invocation of pledge on shares of that company pledged by him, inform the details of such pledge of shares to that company.
Companies should disclose all the details pertaining to the promoters’ share pledge, if at the end of any quarter, the total number of such pledged shares exceeds 25,000 or one percentage of the total shareholding, whichever is lower.
Showing posts with label Pledging of shares. Show all posts
Showing posts with label Pledging of shares. Show all posts
Sunday, February 1, 2009
Wednesday, January 21, 2009
SEBI makes it mandatory to disclose details of shares pledged by the promoters
SEBI vide a press release PR No.58/2009 dated January 21, 2009 has made it mandatory for promoters to disclose details of shares pledged by them.
• It makes it mandatory on the part of promoters (including promoter group) to disclose the details of pledge of shares held by them in listed entities promoted by them.
• Disclosures shall be made as and when the shares are pledged (“event based disclosure”) as well as by way of periodic disclosures.
• Details of pledge of shares and release/ sale of “pledged shares” shall be made to the company and the company shall in turn inform the same to the public through the Stock Exchanges.
• Necessary amendments in the regulations and listing agreement will be made soon.
In the US, SEC mandates the disclosure of shares pledged by directors of a company. In the UK, this is covered under Insider Trading Regulations. The pledging of shares is subject to the same disclosure requirements by insiders as other dealings in shares. The UK definition of insider trading says that ‘dealing’ in shares includes “using as security, or otherwise granting a charge, lien or other encumbrance over the securities of the company”. This unambiguously places pledging (of any form) as being part of insider trading for which disclosure has to be made. Now SEBI has placed Indian regulations at par with the International best practices.
Earlier, the PMAC (Primary Market Advisory Committee) of SEBI had proposed that promoters should make disclosure whenever they raise funds using their holding in listed companies as collateral. SEBI has now accepted this recommendation and the details of these disclosure requirements will be known in few days.
• It makes it mandatory on the part of promoters (including promoter group) to disclose the details of pledge of shares held by them in listed entities promoted by them.
• Disclosures shall be made as and when the shares are pledged (“event based disclosure”) as well as by way of periodic disclosures.
• Details of pledge of shares and release/ sale of “pledged shares” shall be made to the company and the company shall in turn inform the same to the public through the Stock Exchanges.
• Necessary amendments in the regulations and listing agreement will be made soon.
In the US, SEC mandates the disclosure of shares pledged by directors of a company. In the UK, this is covered under Insider Trading Regulations. The pledging of shares is subject to the same disclosure requirements by insiders as other dealings in shares. The UK definition of insider trading says that ‘dealing’ in shares includes “using as security, or otherwise granting a charge, lien or other encumbrance over the securities of the company”. This unambiguously places pledging (of any form) as being part of insider trading for which disclosure has to be made. Now SEBI has placed Indian regulations at par with the International best practices.
Earlier, the PMAC (Primary Market Advisory Committee) of SEBI had proposed that promoters should make disclosure whenever they raise funds using their holding in listed companies as collateral. SEBI has now accepted this recommendation and the details of these disclosure requirements will be known in few days.
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