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Informist, Wednesday, Dec. 17, 2025

 

--SEBI: Shares pledged by non-promoters of IPO-bound co "non-transferable" 

--SEBI: IPO-bound cos must give summary of offer documents while filing DRHP 

 

MUMBAI – The Securities and Exchange Board of India Wednesday said that shares pledged by non-promoters before a company's public issue should be recorded as "non-transferable" by depositories during the applicable lock-in period of the issue. The existing system of depositories does not allow lock-in of pledged shares, which leads to challenges for the issuer.

 

"The depositories through their system shall ensure that, subsequent to the invocation or release of pledge, the shares in the account of the beneficiary (pledger or pledgee) shall automatically be locked-in for the balance period," the market regulator said in a press release. This will ensure compliance with the requirement of lock-in of certain shares even when they are pledged. 

 

Further, SEBI's board said that a focussed, concise, and standardised summary of offer documents should be made available at the draft red herring prospectus stage. The regulator also gave its nod to rationalise disclosures in an abridged prospectus which shall be hosted on the websites. "With the availability of abridged prospectus, the requirement to prepare an offer document summary may be dispensed with in consultation with the Central Government." These are expected to enhance investor comprehension, improve information accessibility and thereby increase the engagement and participation of retail investors in the IPO process. In November, SEBI had issued a consultation paper on the same.  End

 

Reported by Anjana Therese Antony and J. Navya Sruthi

Edited by Ashish Shirke

 

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