Automation of disclosure requirements under SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011

Automation of disclosure requirements

A circular was released by Securities and Exchange Board of India (SEBI) on Automation of Disclosure Requirements under SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (hereinafter referred to as Takeover regulations). This circular has been released with a view to capture and disseminate information related to the ‘encumbrances’ and bring in more transparency, in consultation with the depositories and stock exchanges. 

Applicability of Circular: Automation of disclosure requirements

The circular released by SEBI is applicable on the following entities:

  1. All the listed entities
  2. The recognised stock exchanges
  3. All the registered depositories
  4. Registered Registrar and Share Transfer Agents    

When will the provisions of circular come into effect?

The provisions relating to automation of disclosure requirements shall come into effect from 1st July, 2022.

Background of Automation of disclosure requirements  

SEBI had previously implemented the System Driven Disclosures (SDDs) in phases via circulars in the years of 2015, 2016, 2018 and 2020.

SEBI had also done away with the process of manual filing for most of the transactions by making amendments in the Takeover regulations via gazette notification dated 13th august, 2021. These amendments were supposed to come into effect from 1st April, 2022.

There is no requirement of manual filing for the transactions that are undertaken in the depository system under regulation number 29 and regulation 31 of the Takeover Regulations except for the following transactions where disclosure continues to be filed on a manual basis:

  1. Triggering of disclosure requirements due to disposal or acquisitions of shares, as the case may be, by the acquirer along with the persons acting in concert. (PACs)
  2. Triggering of disclosure requirement where the shares are held in physical form by the PACs and/or acquirer
  3. All those listed companies who have not provided PAN of promoter(s) including member(s) of the promoter group to be designated depository or companies which have not appointed any depository as their designated depository.
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Disclosures of encumbered shares- to capture ultimate lender     

Manual filing is done by the promoters for filing disclosures on reasons for encumbered shares to the stock exchanges which has been specified by SEBI vide circulars released in august of 2015 and august of 2019.

According to a previous circular released by SEBI in July 2020, the depositories have already established systems to capture and record all types of encumbrances including non-disposal undertakings (NDUs) which have been specified under Regulation 28(3) of Takeover Regulations.

With the aim to streamline the capture and dispersing of information related to “encumbrances” and the thus bring in more transparency, in consultation with stock exchanges and depositories, it has been decided that:

  1. All the types of encumbrances that have been defined under Regulation 28(3) of Takeover Regulations have to be necessarily recorded in the depository system.
  2. The details of ultimate lender and the name of the trustee acting on behalf of that ultimate lender such as banks, NBFCs etc shall be captured by depositories. The name of the debenture issuer shall be captured in the depository system in case of issuance of debentures.
  3. The depository shall now capture the reasons for encumbrances in the depository system.

An appropriate mechanism has to be devised by the depositories to record all types of outstanding encumbrances in depository system by June 30, 2022.

Coordination among Market Infrastructure Institutes      

In order to disperse the information mentioned in the circular:

  1. Information shall be provided by the depositories to the stock exchanges for the transactions that have been recorded in the depository system.
  2. The information that has been received by the stock exchanges from both the depositories shall be published on their website. The information will be published in a format specified by SEBI.
  3. An appropriate mechanism shall be devised by the stock exchanges for dissemination of disclosures under SDD in a simple readable pdf format.
  4. The listed companies, depositories and stock exchanges shall reconcile their data at least once in a quarter or immediately whenever they notice any discrepancy during reconciliation.
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Advisory has been issued to the stock exchanges, depositories and Registrar and Share Transfer Agents to bring the particulars of this circular in the notice of the listed companies and their promoters and also to reflect this information on their respective websites.

All the stock exchanges and depositories have been advised to report the progress made by them in the given matter in the form of monthly development report till the amendments have been finally implemented.


The circular has been issued after exercising powers under section 11(1) of the Securities and Exchange Board of India Act, 1992[1]. The reason behind exercising of this power is to protect the interests of the investors in the securities market.

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