Compliance of Regulation 8A of SEBI(SAST) Regulation, 1997

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Bharat Kapoor (Querist)
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09 April 2009 I'd like to know that if no pledge transaction held during a quarter, is it necessary to disclose information of already pledged shares to Stock Exchange under Regulation 8A of SEBI (SAST) Regulations, 1997 for the quarter 31.03.09.

Is it necessary to disclose information for every quarter whether the pledge transactions are held or not during a quarter and if yes, what is the time limit for providing information for every quarter under Regulation 8A. Please explain the newly instserted Regulation 8A of SEBI (Substantial Acquisition of Shares & Takeover) Regulation, 1997

Sachidanand Singh

Sachidanand Singh (Expert)
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13 April 2009 The language of Regulation 8A of SEBI (SAST) Regulations makes it appear a Transitional Disclosure. But the regulation has been placed after R8, which is the first of Continual Disclosure. Further the explanations given to the Regulation make it a continual disclosure. It should therefore be treated as a continual disclosure in the sense that even if there has been no change in the number of shares pledged by any member of the promoter group still the disclosure should be made.

R8A stipulates that promoter or members of promoter groups shall inform the company within 7 days of pledging any shares of the company held by them. They will also inform invocation of the pledge giving full details. Invocation of pledge takes place when the shares get transferred to pledgee’s account. (Suppose I pledged my shares with you to secure a loan you granted me. If I default on the loan, you will get the shares transferred from my DP account (where the pledge was recorded) to your DP account thus you will become the beneficial owner of the shares pledged by me)

Every calendar quarter by the 7th of the following month (7th Apr, Jul, Oct & Jan) the company is to inform the stock exchanges where its shares are listed the details of earlier pledges and details of new pledges of shares made by prompter / members of promoter group. If there are no new pledges, the earlier existing pledges should be reported with a statement that no pledges of shares were made in the quarter under report.

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