SEBI tightens rules for pledged shares, MFs to shield minority shareholders

Promoters of a company will have to disclose reasons for having pledged shares when combined pledges exceed 20% of the total share capital in a company or 50% of their total shareholding in the firm.

India's market regulator reinforced disclosure rules for when the shares in a company are pledged as collateral and tightened rules for mutual funds to try to protect minority shareholders and retail investors.

Promoters of a company--often its main investors--will have to disclose reasons for having pledged shares when combined pledges exceed 20% of the total share capital in a company or 50% of their total shareholding in the firm, the Securities and Exchange Board of India (SEBI) said in a statement on Thursday.

Such pledging refers to the use of shares as collateral when investors are seeking to borrow money. When the