The Securities and Exchange Board of India (SEBI) has issued a circular on July 24, 2020 for the recording of all types of encumbrances in Depository System.
Following provisions are to be implemented:
• Depositories shall put in place a system for capturing and recording all types of encumbrances, specified under Regulation 28(3) of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011.
• The freeze and unfreeze instructions executed by the Participant for recording all encumbrances will be subject to 100% concurrent audit.
• Depository participants shall not be party to any type of encumbrance outside the depository system as outlined herein.
• The depositories shall implement the provisions of this circular within one month.
• Following advises have been provided to the depositories:
1. Make amendments to the relevant byelaws, rules, and regulations for the implementation of the above decision, as applicable or necessary.
2. To carry out system changes if any to implement these provisions.
3. Disseminate the provisions of this circular on their website.
4. The Monthly Development Report shall consist of the status of implementation of the provisions of this circular, to be communicated to SEBI.
[Circular No. SEBI/HO/MRD2/DDAP/CIR/P/2020/137]
