SEBI tightens norms for Share pledging
Aug 08 2019
News Category: Regulatory Updates
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Securities and Exchange Board of India is tightening rules for pledging of shares in promoter driven listed entities. The purpose is to increase transparency by detailing the reasons behind encumbrance. If the combined encumbrance of the promoter and persons acting in concert (PACs) equals or exceeds 50% of their shareholding or 20% of the total share capital of the company, the promoter is required to disclose details for encumbrance in a prescribed format. This move follows the latest crises seen by mutual fund companies, where AMCs had invested in the papers of companies that were backed by promoter shares.

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