The Securities and Exchange Board of India vide its notification dated 13th August 2021 has decided that a lien shall 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 shall be provided by respective Depositories to Clearing Corporations (CC)
Further, the details in respect of shareholder’ settlement for tender offer process shall be provided to CCs 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 15,202.
Further, as per the revised guidelines, 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.
