SEBI introduces additional disclosure requirements for Listed Companies under the Takeover Regulation for encumbered shares; effective 1st October 2019
The Securities and Exchange Board of India (“SEBI”) has prescribed the format for disclosure of reasons for encumbrance by promoter of listed companies under Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (“Takeover Regulations”).The disclosure requirements was prescribed under a 2015 circular.
In addition to the existing disclosure norms (which was in Annexure-I) and to bring greater transparency regarding reasons for encumbrance, the present Circular dated 7th August 2019, has been issued. The compliance requirements under the same is effective October 1, 2019.
Following are the additional disclosure requirements–
- The promoter of every listed company shall specifically disclose detailed reasons for encumbrance in the format provided at Annexure – IIof this Circular, within two working days from the creation of such encumbrance, if the combined encumbrance by the promoter along with persons acting in concert (“PACs”) with him equals or exceeds:
a) 50% of their shareholding in the company; or
b) 20% of the total share capital of the company,
Such disclosures will be warranted on every occasion, when the extent of encumbrance (having already breached the above threshold limits) increases further from the prevailing levels.
2. If the existing combined encumbrance by the promoter along with PACs with him is either 50% or more of their shareholding in the company or 20% or more of the total share capital of the company as on September 30, 2019, he shall specifically make first disclosure on detailed reasons for encumbrance in the format provided at Annexure – II, by October 04, 2019;
3. The listed companies shall disclose the contents of Annexure – II on their websites within two working days of receipt of such disclosure.
Source: Securities and Exchange Board of India