The Securities and Exchange Board of India (SEBI) on February 05, 2026, notified regarding the Creation/Invocation of pledge of securities through the depository system.
The following has been stated:
• SEBI has amended the framework for pledging of shares through the depository system to align it with Sections 176 and 177 of the Indian Contract Act, 1872, which require reasonable notice to the pawnor before sale of pledged assets.
• Depositories shall now update their Pledge Request Forms to include undertakings from both pledger and pledgee. The pledgee shall undertake to provide reasonable notice before sale and comply with the Contract Act provisions, while both parties must agree to abide by the Depositories Act, SEBI regulations, circulars, and bye-laws. Depositories are also required to maintain a standardized Pledge Request Form format.
• Further, upon invocation of a pledge, depositories must notify both pledger and pledgee, confirming invocation and recording of the pledgee as “beneficial owner” under Regulation 79(8) of the DP Regulations.
• Depositories shall amend their bye-laws, make necessary system changes, inform participants, and implement the provisions by April 6, 2026.
[Notification no. - HO/47/14/12(1)2026-MRD-POD2/I/4229/2026]
