Sebi directs depositories to capture and record all encumbrances

The Securities and Exchange Board of India( Sebi ) on Friday asked all depositories to put in place a system for capturing and recording all types of encumbrances such as share pledges At present, rules require promoters to disclose details of their encumbered shares.“It was observed that apart from pledge, hypothecation and non-disposal undertakings(NDUs), currently there is no framework to capture the details of other types of encumbrances in the depository system,” Sebi said in a circular.The regulator said depositories should follow processes and other norms similar to that required for capturing and recording NDUs in depository system.“The freeze and unfreeze instructions executed by the participant for recording all encumbrances will be subject to 100% concurrent audit,” Sebi said.The regulator said depository participant should not facilitate or be party to any type of encumbrance outside the depository system.Depositories would have to implement this new rule within one month.