Sebi decides on marking lien on demat accounts

Markets regulator Sebi on Friday decided that a lien will be marked on the demat accounts against the shares of the shareholders participating in the tender offers made following open offers, buyback offers and delisting of securities. Upon finalisation of the entitlement, only accepted quantity of shares will be debited from the demat account of the shareholders and the lien marked against unaccepted shares will be released, Sebi said in a circular.

The measures will reduce the systematic risks associated with the movement of securities from the demat account of shareholders to clearing corporation account and vice versa and make the process more investor friendly. Under the existing mechanism, the shares tendered by the shareholders are required to be directly transferred to the account maintained by the clearing corporation and different tendering processes are being adopted by depositories.

Such transfer involves systematic risk, substantial time and cost, the regulator noted. The revised mechanism will be applicable to all the tender offers for which public announcement is made on or after October 15, 2021.

Explaining the procedure for tendering and settlement of shares through stock exchange, Sebi said that lien will be marked in the depository system by the depositories in the beneficial owner's demat account for the shares offered in tender offers.

The details of shares marked as lien in clients' demat account will be provided by respective depositories to clearing corporations (CC). Further, details in respect of shareholder's entitlement for tender offer process will be provided to CCs by issuer /registrar to an issue and share transfer agent (RTA) handling respective tender offer. CC will cancel excess blocked securities and securities will become free balance in shareholder's account. On settlement date, all blocked shares mentioned in accepted bid will be transferred to CCs.