Disclosure on pledged shares made mandatory

The Securities & Exchange Board of India (SEBI) on January 21 announced that company promoters must disclose shares pledged with the financial institutions and the disclosure should be event-based as well as periodic. "To enhance the disclosure requirements, SEBI Board, in its meeting held today, decided to make 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," SEBI said in a release. "Such disclosures shall be made as and when the shares are pledged (event based disclosure) as well as by way of periodic disclosures," it added. The capital market regulator would make necessary changes in the relevant regulations and the listing agreement to accommodate the new measures taken on pledging of promoter shares, SEBI chairman CB Bhave told a news conference in Mumbai after a board meeting. He also said there will be no limit on the number of shares that can be pledged by the promoters. Disclosure norms on shares pledged by the promoters need to be enhanced further, Bhave added, as pledging of promoter shares affects other shareholders in the company. "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," SEBI said.