Pledge Of Shares Agreements

(ii) The transfer of shares, if pledged, is in accordance with the current IDI policy. (i) The underlying ECB maturity is linked to the duration of the pledge of shares The regulatory amendment introduced by RBI Circular 57 recently allows non-resident shareholders of Indian companies to obtain loans from Indian and foreign banks using their stake in Indian companies as collateral, subject to obtaining the No-Objection Certificate (NOC) from the competent authorities. Distributors (AD). As a result, the RBI did not give its prior consent to the pledging of Indian shares held by non-residents, subject to compliance with the prescribed conditions. All major public sector and private banks, as well as multinational banks acting as ADs in relation to FDI-related transactions, can play the role of AD with regard to the seizure of shares. Rule 29 does not apply to Scheduled`s commercial banks or public financial institutions as collateral holders in connection with the pledging of debt insurance shares in the course of normal operations. Negative mortgage and indirect control of corporate restructurings – Holding or controlling the shares means that the borrower cannot attempt to offer the shares to another lender as collateral. In addition, the lender can ensure that it is aware of and participates in corporate restructurings within the group of borrowers, as the borrower`s lawyers must reimburse the borrower`s shares for the purpose of issuing new or replacement certificates as part of the restructuring. Stocks are traded on the stock exchange and their prices fluctuate very often.

As stock prices fluctuate constantly, the value of collateral changes constantly. If stock prices fall, the value of collateral also erodes. To offset the eroded value, the promoter must either mortgage more shares, provide additional liquidity, or mortgage more assets as collateral. In the event of a failure by the promoters to compensate for the eroded value of the guarantees, the lender may sell the shares on the open market to recover its money.. . . .

Comments are closed.