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SEBI through Circular dated 08.04.2026 (“EODB Circular”)1 has introduced a mechanism for lock-in of pledged shares.
SEBI vide notification dated 21.03.2026 had amended the ICDR Regulations to provide that specified securities on which lock-in cannot be created may be recorded as “non-transferable” by depositories for the duration of the applicable lock-in period.
In the EODB Circular, SEBI notes that depositories have issued the framework to be followed by issuers and directs that stock exchanges, depositories, merchant bankers and issuers shall ensure compliance with the mechanism for lock-in of pledged shares.
The framework inter-alia requires: (a) Incorporation of suitable provisions in the Articles of Association for treating pledged shares as locked-in shares; (b) Issuance of necessary intimations to the concerned lenders or pledgees; and (c) Making suitable disclosures in the offer documents. stock exchanges, depositories, merchant bankers and issuers shall ensure compliance with the mechanism for lock-in of pledged shares. The EODB Circular has come into force with effect from 08.04.2026.
Footnote
1 SEBI Circular on Ease of doing business - mechanism for lock-in of pledged shares
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