SEBI issues new guidelines for tendering and settlement of shares through stock exchange

The Securities and Exchange Board of India has issued a circular dated August 13, 2021 stating that a lien shall be marked by the Depositories in the depository system in the Beneficial Owner’s Demat Account for the shares offered in tender offers.


Key guidelines are:

  • Every detail of shares marked as lien in clients’ Demat account shall be provided by respective Depositories to Clearing Corporations (CC).
  • All details in respect of shareholders’ settlement for tender offer process shall be provided to Clearing Corporations by Issuer/Registrar to an Issue and Share Transfer Agent (RTA) handling the respective tender offer.
  • 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 revised mechanism shall be applicable to all the tender offers for which Public Announcement is made on or after October 15,2021.
  • According to circular, Inter Depository Tender Offer instruction shall be initiated by shareholders at Source Depository to CM pool/CC account at target Depository. Source Depository shall block the shareholder’s securities (i.e., transfers from free balance to blocked balance) and sends IDT message to target Depository for confirming the creation of lien.


*Tanvi Singh, Editorial Assistant has reported this brief.

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