SEBI Updates Disclosure Requirements for Specified Securities

The Securities and Exchange Board of India (SEBI) has introduced significant amendments to the disclosure requirements for holding specified securities in dematerialized form under Regulation 31 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. These updates, announced through Circular No. SEBI/HO/CFD/CFD-PoD-2/P/CIR/2025/35 dated March 20, 2025, aim to enhance transparency and investor clarity in shareholding pattern disclosures.

SEBI had previously provided a structured framework for shareholding pattern disclosures through Master Circular No. SEBI/HO/CFD/PoD2/CIR/P/0155 dated November 11, 2024. Under this framework, specified securities were classified into three categories:

1. Promoter and Promoter Group
2. Public Shareholding
3. Non-Promoter Non-Public Shareholding

To ensure accuracy and prevent duplication, SEBI mandated that shareholding details be consolidated based on PAN and folio numbers. The regulations also required that public shareholding include:

1. Shareholders holding 1% or more equity
2. Entities acting in concert

Further, SEBI reinforced the requirement for 100% dematerialization of promoter and promoter group shareholding, allowing exemptions only in cases of:

1. Pending transfers
2. Sub-judice matters (legal disputes)
3. Demise of a promoter
4. Other exceptions approved by stock exchanges

Listed companies must seek stock exchange approval for these exemptions and disclose them separately. Additionally, non-promoter shareholding must have at least 50% in dematerialized form, with the exception of government holdings.

In response to input from depositories and stock exchanges, SEBI has introduced modifications to Annexure 2, Section II-A, Chapter II, which governs the holding of specified securities and shareholding patterns.

Key Amendments Under the Circular:

1. Amendments to Tables I-IV of the Shareholding Pattern: The following changes have been introduced to the shareholding pattern disclosure requirements:
2. Enhanced Encumbrance Disclosures: Listed entities must now explicitly disclose details of Non-Disposal Undertakings (NDUs), other encumbrances, and the total number of shares pledged or otherwise encumbered, including NDUs.
3. Clarification on Convertible Securities: The definition of underlying outstanding convertible securities now explicitly includes Employee Stock Option Plans (ESOPs). Column ‘X’ of the format has been updated to:
   “No. of Shares Underlying Outstanding Convertible Securities (including Warrants, ESOP, etc.).”
4. Introduction of a New Column for Fully Diluted Shares: A new column has been added to capture the total number of shares on a fully diluted basis, including warrants, ESOPs, and convertible securities.
5. Amendment to Table II of the Shareholding Pattern
6. A new footnote has been added to Table II to provide details of promoters and promoter groups with NIL shareholding.

These amendments will come into force from the quarter ending June 30, 2025.

Stock Exchanges have been instructed to inform all listed companies of these changes and to disseminate the circular on their website, making necessary amendments to their bye-laws, rules, and regulations. Depositories are required to update their systems to accommodate the revised disclosure requirements.

Investors will now have clearer and more comprehensive information regarding share encumbrances and fully diluted shareholding structures. Companies and stakeholders can make better-informed decisions based on standardized and more detailed reporting formats.