(ET)
The Securities and Exchange Board of India (Sebi) is set to tighten disclosure norms for pledged shares to cover innovative and complex structures, said people with knowledge of the matter. The board, which is likely to meet on June 27, is expected to discuss the proposal on pledged shares, tweak differential voting rights so founders can retain control and also discuss rules on royalty payments by listed companies, they said. The regulator plans to widen the definition of encumbrance and increase disclosures required on encumbered shares by promoters. “Any kind of encumbrance — including any restriction on free and marketable titles to shares by whatever name called, executed directly or indirectly — will have to be disclosed,” said one of the persons. Currently, encumbrance covers pledge of shares, liens, negative liens and non-disposable undertakings.
