tag:blogger.com,1999:blog-3202774368551476669.post7390851716208248018..comments2023-09-15T16:21:31.980+05:30Comments on INDIAN CORPORATE LAW: Satyam Update 3 - is pledge of shares insider trading?Umakanth Varottilhttp://www.blogger.com/profile/12438677982004444359noreply@blogger.comBlogger10125tag:blogger.com,1999:blog-3202774368551476669.post-56982541204090358812011-04-24T01:49:49.566+05:302011-04-24T01:49:49.566+05:30@V. Umakanth-
Thank you for your reply. However, ...@V. Umakanth-<br /><br />Thank you for your reply. However, if the Promoter pledge shares to a company as security for the company buying shares for the promoter's company. will that fall under financial assitance under 77?<br /><br />Eg- X promoter of company Y, pledges shares to Z to secure Z's investment into equity shares of Y. Is this banned under Section 77?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-3202774368551476669.post-40483145597714070072011-04-20T03:46:59.007+05:302011-04-20T03:46:59.007+05:30@ Anonymous. Pledge of shares by promoters does no...@ Anonymous. Pledge of shares by promoters does not violate the rules against financial assistance. Those rules apply only when the company provides financial assistance for purchase of its own shares.Umakanth Varottilhttps://www.blogger.com/profile/12438677982004444359noreply@blogger.comtag:blogger.com,1999:blog-3202774368551476669.post-67266012477848985852011-04-19T12:23:25.118+05:302011-04-19T12:23:25.118+05:30Will Pledge of Shares by a promoter amount to fina...Will Pledge of Shares by a promoter amount to financial assistance under Section 77(2) of the Companies Act? If not, why?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-3202774368551476669.post-33280887938342853282009-01-22T21:23:00.000+05:302009-01-22T21:23:00.000+05:30Jayant:Would you be aware whether there is any vie...Jayant:<BR/><BR/>Would you be aware whether there is any view by SEBI or any other regulatory authority on "pledge of shares amounting to insider trading". Except the ET report on which your post is based, is there anything which points in the same direction? Thanks.Renu Guptahttps://www.blogger.com/profile/13605419535223237023noreply@blogger.comtag:blogger.com,1999:blog-3202774368551476669.post-71842972745109913282009-01-21T22:00:00.000+05:302009-01-21T22:00:00.000+05:30Anonymous said:-"It would also be interesting to s...Anonymous said:-<BR/><BR/>"It would also be interesting to see the need for disclosure under the takeover code for pledge of shares where Banks FI are not a party."<BR/><BR/>Probably the position is the same but in the meantime, SEBI has announced its decision. See my post on the Press Release. Maybe we can consider these and other issues in the light of the actual amendment as and when announced. <BR/><BR/>- JayantCA Jayant Thakurhttps://www.blogger.com/profile/06755740172092808729noreply@blogger.comtag:blogger.com,1999:blog-3202774368551476669.post-46242069671635051852009-01-21T16:48:00.000+05:302009-01-21T16:48:00.000+05:30It would also be interesting to see the need for d...It would also be interesting to see the need for disclosure under the takeover code for pledge of shares where Banks FI are not a party.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-3202774368551476669.post-77094772190010042712009-01-18T21:45:00.000+05:302009-01-18T21:45:00.000+05:30Thanks, Renu, for your useful inputs and reference...Thanks, Renu, for your useful inputs and references. <BR/><BR/>There are, as you rightly pointed out, some provisions of law, that do require disclosure of pledge to the company/depository. However, the real challenge and concern would be whether the law makers would make specific disclosure requirement of such pledge or other charges on the Promoters' shares to the general public. Howsoever desirable it may be and howsoever widely followed it may be worldwide, there woulld, as the learned author of the Financial Express article points out, resistance to it and eventually the demand may be forgotten. The underlying skeletons are too horrifying perhaps!!<BR/><BR/>- JayantCA Jayant Thakurhttps://www.blogger.com/profile/06755740172092808729noreply@blogger.comtag:blogger.com,1999:blog-3202774368551476669.post-18966805301829992502009-01-17T23:36:00.000+05:302009-01-17T23:36:00.000+05:30Also..Please also see the post by Professor Jayant...Also..<BR/><BR/>Please also see the post by Professor Jayanth Verma at http://www.iimahd.ernet.in/~jrvarma/blog/index.cgi/2008/12/30/<BR/><BR/>Relevant portion is :<BR/><BR/>"The model code on insider trading in the UK listing rules states that “dealing” in shares includes “using as security, or otherwise granting a charge, lien or other encumbrance over the securities of the company;”. Thus pledge of shares is subject to the same disclosure requirements as other dealings in shares."Renu Guptahttps://www.blogger.com/profile/13605419535223237023noreply@blogger.comtag:blogger.com,1999:blog-3202774368551476669.post-24223987914053509522009-01-17T23:34:00.000+05:302009-01-17T23:34:00.000+05:30Please see this newsreport at http://www.financial...Please see this newsreport at http://www.financialexpress.com/news/need-for-disclosure-on-pledge-of-shares-by-promoters/295226/3..<BR/><BR/>the relevant paragraph is "It is interesting to note that a provision in this regard already exists under the Depositories Act, where promoters have to disclose their pledged holding separately to the depository, on which a third party charge exists. This becomes necessary in order to avoid banks from selling shares without the consent of the original owner (promoter in this case)."<BR/><BR/>I have independently checked and Section 12 of Depositories Act, provides for the said provison.<BR/><BR/>It is reproduced below.<BR/><BR/>12. Pledge or hypothecation of securities held in a depository<BR/><BR/>(1) Subject to such regulations and bye-laws, as may be made in this behalf, a beneficial owner may with the previous approval of the depository create a pledge or hypothecation in respect of a security owned by him through a depository.<BR/><BR/>(2) Every beneficial owner shall give intimation of such pledge or hypothecation to the depository and such depository shall thereupon make entries in its records accordingly.<BR/><BR/>(3) Any entry in the records of a depository under sub- section (2) shall be evidence of a pledge or hypothecation. <BR/><BR/>Let me know your views?Renu Guptahttps://www.blogger.com/profile/13605419535223237023noreply@blogger.comtag:blogger.com,1999:blog-3202774368551476669.post-64796427725658260672009-01-17T23:23:00.000+05:302009-01-17T23:23:00.000+05:30Jayant:In a public company, minutes of meetings ar...Jayant:<BR/><BR/>In a public company, minutes of meetings are available for inspection (including electronically on MCA website on payment of certain amount of money). These minutes would include (in the resolutions passed and also the general description) minutes for any loan approved by the board, including securities which have been provided by the company/promoters for the loan.<BR/><BR/>Should this not take care of the discloure requirement, if any?Renu Guptahttps://www.blogger.com/profile/13605419535223237023noreply@blogger.com