Sebi strengthens pledge framework, mandates standard forms and alerts

New Delhi, Feb 5 (PTI) Sebi on Thursday directed depositories to strengthen norms for the creation and invocation of pledges of securities by introducing clearer undertakings, a standardised pledge request form, and mandatory notifications when a pledge is invoked, in line with the Indian Contract Act.

Under this, pledge request forms must include undertakings from both the pledger and pledgee, including a commitment by the pledgee to provide reasonable notice before selling pledged securities, the markets regulator said in a circular.

Sebi has also mandated a standardised pledge request form across depositories and required them to send notifications to both parties when a pledge is invoked, confirming that the pledgee has been recorded as the beneficial owner.

The new norms will be implemented on or before April 6, 2026. PTI SP ANU ANU