tag:blogger.com,1999:blog-3202774368551476669.post5636034414104489150..comments2023-09-15T16:21:31.980+05:30Comments on INDIAN CORPORATE LAW: Disclosure of Pledge of shares of Promoters - some more thoughtsUmakanth Varottilhttp://www.blogger.com/profile/12438677982004444359noreply@blogger.comBlogger9125tag:blogger.com,1999:blog-3202774368551476669.post-22734090843140811052009-03-05T14:41:00.000+05:302009-03-05T14:41:00.000+05:30Hi Maheshwari,Can you please elaborate a little on...Hi Maheshwari,<BR/><BR/>Can you please elaborate a little on your query? I feel you are probably referring to the issue whether a disclosure is required Regulation 8A of an encumbrance not amounting to a pledge but would be happy if you express in more detail first. Thanks.<BR/><BR/>- Jayant ThakurCA Jayant Thakurhttps://www.blogger.com/profile/06755740172092808729noreply@blogger.comtag:blogger.com,1999:blog-3202774368551476669.post-13225060095628212152009-03-05T12:52:00.000+05:302009-03-05T12:52:00.000+05:30Sir,I have somedoubt in revised 8A(4) regulation. ...Sir,<BR/><BR/>I have somedoubt in revised 8A(4) regulation. if there is no pledge of shares so 8A(4) is complied by the company stating NIL.maheshwarihttps://www.blogger.com/profile/12771435330555836511noreply@blogger.comtag:blogger.com,1999:blog-3202774368551476669.post-10773950239884972742009-02-20T11:28:00.000+05:302009-02-20T11:28:00.000+05:30This route will fall under the category of "otherw...This route will fall under the category of "otherwise encumbered".<BR/><BR/>Kind regards,<BR/>Yogesh ChandeAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-3202774368551476669.post-64215120651285132172009-02-12T12:26:00.000+05:302009-02-12T12:26:00.000+05:30Below is a news article (page 13, yesterday’s edit...Below is a news article (page 13, yesterday’s edition of the ET) outlining one of the alternative ways being suggested to avoid calling an arrangement a “pledge”.<BR/><BR/>“It’s a two-way street here <BR/><BR/>Promoters are looking for new ways to work around SEBI’s regulation that requires them to disclose shares pledged by them. Recently, two promoters who had borrowed against their shares approached their lender with a simple proposal. In return for cancelling the pledge, the promoters would transfer shares to a depository account with the broking arm of the lender. The broking arm would also be given a power of attorney which would give it a right to sell the shares. The end result would be that the promoters’ leveraged status would remain undercover and the lender’s security would also not be compromised. With Tuesday being the last day for disclosures, it would soon be clear whether the lenders have agreed to the proposal.”<BR/><BR/>Would you say this is workable in light of your analysis?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-3202774368551476669.post-36785660789135278282009-02-10T12:55:00.000+05:302009-02-10T12:55:00.000+05:30An interesting article on the topic.http://busines...An interesting article on the topic.<BR/><BR/>http://businesstoday.digitaltoday.in/index.php?option=com_content&task=view&id=9954&issueid=49Renu Guptahttps://www.blogger.com/profile/13605419535223237023noreply@blogger.comtag:blogger.com,1999:blog-3202774368551476669.post-11673406701106767372009-02-09T12:18:00.000+05:302009-02-09T12:18:00.000+05:30I feel that there is a gap of 14 working days (3 w...I feel that there is a gap of 14 working days (3 weeks) since the information of pledge or its invocation/revocation reaches to the public. It would have been much more effective, if the time line of Insider trading (2+2 days) should have been followed.<BR/><BR/>Further, in many cases, the promoters have entered into agreements with PEs for creating a negative lien on their shareholding in the Company or execute a Non-disposal undertaking. Whether, it would be covered under "shares encumbered or otherwise encumbered".<BR/><BR/>Its very tricky again.Dhirajhttps://www.blogger.com/profile/15225400377712335798noreply@blogger.comtag:blogger.com,1999:blog-3202774368551476669.post-62113465122578306532009-02-07T16:48:00.000+05:302009-02-07T16:48:00.000+05:30Hi Renu,Thanks for your points.On the issue of dif...Hi Renu,<BR/><BR/>Thanks for your points.<BR/><BR/>On the issue of differing requirements, my point is that Regulation 8A requires disclosure only of pledged shares while Clauses 35/41 require disclosure of pledged shares as also shares otherwise encumbered. This can obviously result in differing figures if promoters have encumbered some of their shares. <BR/><BR/>On issue of revocation, yes, you are right, the use of the word revocation does not seem wholly appropriate and a better word could have been used. Perhaps the intention is to cover also, taking your example, the release of pledge through satisfaction. Another way to look at it is that the revocation is by the Lender, usually if the loan is repaid. Of course, here too, the wording could have been better. Incidentally, the terminology used by depositories is "cancellation of entry of pledge".<BR/><BR/>- JayantCA Jayant Thakurhttps://www.blogger.com/profile/06755740172092808729noreply@blogger.comtag:blogger.com,1999:blog-3202774368551476669.post-39822010357929161842009-02-07T15:43:00.000+05:302009-02-07T15:43:00.000+05:30Some thoughts of mine corresponding to your points...Some thoughts of mine corresponding to your points.<BR/><BR/>1. Depending on the timing of the filing, the figfures disclosed should be uniform across all the 3 filings. I am unable to understand your concern on inconsistencies being created.<BR/><BR/>4. As stated as a comment to your previosu post, i am unable to understand the relevance of "revocation of pledge". Either there is a pledge or there is no pledge.Whether the pledge does not exist because it has been staisfied or because the parties have agreed to release it, how relevant is it?Renu Guptahttps://www.blogger.com/profile/13605419535223237023noreply@blogger.comtag:blogger.com,1999:blog-3202774368551476669.post-52026242577888994902009-02-05T19:40:00.000+05:302009-02-05T19:40:00.000+05:30Hello Mr. Thakur,Following example {in connection ...Hello Mr. Thakur,<BR/><BR/>Following example {in connection with regulation 8A(4)}is to add/clarify to what you said for readers benefit in addition to my earlier comments in response to your earlier posting on pledge of shares --<BR/><BR/>1. Suppose, a director purchases 100 shares on 1-jan-09. This should be reported to the company within 7 working days.<BR/><BR/>2. The same director again purchases 100 shares on 1-feb-09. This also needs to be reported to the company within 7 working days. <BR/><BR/>3. On 1-Mar-09, the said director again purchases 24,801 shares. This also needs to be reported to the company within 7 working days. <BR/><BR/>Now following is the googly and companies needs to be careful:<BR/><BR/>4. In case of (1) & (2) above, the company need not report the respective disclosures (of 100 each) to stock exchange, because the aggregate is less than 25,000 shares.<BR/><BR/>5. But when the disclosure mentioned at (3) above is received, the company needs to disclose the aggregate of all the three disclosures to the stock exchanges because all the preceding two disclosures where though less than 25,000 shares, but the last disclosure of 24,801 shares has triggered the disclosure to stock exchanges i.e. for the quarter i.e. Jan-Mar, the aggregate shares pledged exceeds 25,000 shares i.e. 25,001 in the aforesaid example. Therefore company should disclose, the cumulative shares pledged during the said quarter and should not be under the impression that the disclosure is not required, as each of them are less than 25,000 shares.<BR/><BR/>Trust the above is clear (though confusing) and may be beneficial to learned readers.<BR/><BR/>Kind regards,<BR/>Yogesh ChandeAnonymousnoreply@blogger.com