Brief Overview:
SEBI has aligned the process of invocation of pledge with the provisions of the Indian Contract Act, 1872, and has accordingly brought in clarity in the depository framework.
Technical Details:
During the enforcement procedure, the requirement of prior ‘reasonable notice’ is now also set out in the SEBI framework for invocation through the depository system in alignment with the Indian Contract Act, 1872.
Once such reasonable notice is provided and the pledge has been invoked, the pledgee shall be recorded as the ‘beneficial owner’.
SEBI has also directed the depositories to update the pledge request form to enable the above.
For further details, please see:
Creation/Invocation of pledge of securities through depository system
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