Rules tightened to curb unauthorised transfers of unlisted shares

NSDL now allows private firms to restrict transfer, pledging, and hypothecation of unlisted shares, aiming to curb unauthorised trades and improve compliance mechanisms

Top depository firm National Securities Depository Ltd (NSDL), that holds and manages securities in electronic form, has tightened rules regarding unlisted shares, allowing private companies to restrict transfer, pledging, and hypothecation of their unlisted stocks in the market.

 

In a circular dated August 11, NSDL revised its bye-laws and business rules concerning restricted transferability and the freezing or unfreezing of unlisted shares.

 

Under the updated framework, companies can request NSDL to impose restrictions on transfers and control pledges of their shares. Upon verifying the request, the depository may grant approval for such restrictions.

 

Legal experts say these new norms will