Circular no. HO/49/(17)2026-CFD-POD2/I/8965/2026; Dated: 08.04.2026
The Securities and Exchange Board of India (SEBI) has introduced a mechanism for lock-in of pledged shares under the ICDR Regulations, aimed at easing compliance for issuers.
1. Objective of the Mechanism
The initiative seeks to:
- Facilitate compliance with lock-in requirements
- Address practical challenges in handling pledged shares during public issues
- Ensure regulatory clarity and operational ease
2. Framework Issued by Depositories
To operationalise the mechanism, depositories have prescribed a framework for issuers, which includes:
- Amendments to Articles of Association (AOA) – Incorporating provisions to enable lock-in of pledged shares
- Intimation to Stakeholders – Informing lenders/pledgees about the lock-in requirements
- Disclosures in Offer Documents – Providing clear disclosures regarding pledged shares and lock-in conditions
3. System and Process Enhancements
Depositories have:
- Made necessary changes to their systems and processes
- Enabled smooth implementation and tracking of locked-in pledged shares
4. Regulatory Impact
The framework ensures:
- Better alignment between pledge arrangements and lock-in norms
- Reduced operational complexity for issuers
- Enhanced transparency for investors
5. Conclusion
This mechanism reflects SEBI’s effort to modernise compliance processes, ensuring that pledged shares are seamlessly integrated within the lock-in framework, while maintaining investor protection and regulatory integrity.
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