The Securities and Exchange Board of India, or SEBI, is the official regulator of the markets. It devises and changes rules and regulations related to shareholders and trading from time to time, with the aim of making the process of investment and the operation of the markets seamless and transparent. In a recent announcement, made towards the end of 2021, SEBI has regulated that a lien would be marked in Demat accounts of shareholders. This lien would be marked against shares held by participating shareholders of tender offers which were made after open offers were made. Furthermore, the lien would also apply to securities delisted and ‘buy back offers’.
Once an entitlement to shares is finalized, only the quantity of shares accepted would be debited from a shareholder’s Demat account. Furthermore, the lien that is marked against shares which are not accepted would be then released. The aim of such a measure is to reduce the risks linked with the movement of stocks and shares, and securities in general, from shareholders’ Demat accounts to clearing corporations. Moreover, as the shares move from a depository trust and clearing corporation back to Demat accounts, the process will be smooth and more seamless for investors.
Under the purview of the prevalent system, shares that are tendered by shareholders are needed to be directly transmitted to accounts that are operated and maintained by clearing corporations. Additionally, various tendering procedures are followed by depositories. These movements involve a calculated degree of risk. Moreover, significant time and effort, along with cost is also exhausted. The new way of running operations will save on these. In the revision of the system, every tender offer made by public announcement on or later than October 15, 2021, will have to abide by new mechanisms.
You may be a part of the large number of shareholders and stakeholders in the investing community. While you may have opened a free Demat account, you will, as a shareholder, have to abide by regulations set forth by SEBI. In a statement, SEBI has explained how the regulation will work. The said lien would be marked in the system of the depository by depositories in the Demat account of the beneficiary, the investor or shareholder. This lien would be marked for shares that are offered as part of tender offers. The details pertaining to shares in the shareholder’s fund, that are marked under lien in a Demat account, would be available through depositories. These depositories would give the details to clearing corporations.
SEBI is constantly changing regulations to streamline investment mechanisms and processes. When you wish to start trading, you can be sure to get useful tips with all the new rules and applications to follow at a versatile broker like Motilal Oswal.
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