SEBI in a bid to render more transparency in the system now has asked listed companies for which the total encumbrance on promoter shares is over 50% of their shareholding or a fifth of the total shareholding to disclose additional information i.e. detailed reasons. The detailed circular in this regard was issued on Wednesday. Earlier the new set of rules governing pledging of shares by promoters was released by the market regulator in June.
On a recent basis, the SEBI has widened the scope of definition of encumbrance that now includes direct and indirect pledge, liens and non-disposal undertakings (NDUs).
In respect of the details, the companies will have to give in such details that include end use of money as well as security cover extended. Also, they need to disclose if the encumbrance relates to any debt instrument and its credit rating. Further, such disclosures will need to be made within two days of creation of encumbrance.