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This Newsletter covers key Regulatory & Policy Updates, Government Notifications and Judicial Pronouncements.
REGULATORY AND POLICY UPDATES
SEBI grants one time relaxation for extension of validity of SEBI observations.
The Securities and Exchange Board of India ("SEBI") vide its circular dated 07.04.2026 ("SEBI Observations Circular")1 has granted a one-time relaxation with respect to the validity of SEBI observation letters issued under the SEBI (Issue of Capital and Disclosure Requirements) Regulations 2018 ("ICDR Regulations").
In terms of Regulations 44(1) and 59C of the ICDR Regulations, a public issue is required to be opened within twelve (12) months and eighteen months (18) respectively from the date of issuance of observations by SEBI. SEBI noted that difficulties being faced by issuers in mobilising resources and accessing the capital markets due to the ongoing geopolitical tensions in the Middle East, leading to deferment, recalibration or withdrawal of issuance plans and possible lapses in validity of observation letters.
Noting these difficulties, SEBI has granted a one-time relaxation by extending the validity of observation letters expiring between 01.04.2026 and 30.09.2026 up to 30.09.2026. The extension is subject to submission of an undertaking by the lead manager to the issue confirming compliance with Schedule XVI of the ICDR Regulations at the time of filing the updated offer document with SEBI.
The SEBI Observations Circular has come into force with immediate effect i.e., from 07.04.2026.
SEBI provides one-time relaxation from penal provisions for non-compliance with Minimum Public Shareholding.
The Master Circular dated 11.07.2023 ("Master Circular"), issued in connection with compliance under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 inter alia, sets out the framework for action to be taken by recognized stock exchanges and depositories against listed entities that fail to meet the Minimum Public Shareholding ("MPS") requirements, including imposition of fines, freezing of promoter shareholding, and other consequential actions.
Upon representations received from industry bodies highlighting the difficulties faced by listed entities in achieving MPS compliance, inter-alia, on account of capital market volatility due to ongoing geopolitical tensions in the Middle East, SEBI has issued a circular dated 07.04.2026 ("MPS Circular") granting one-time relaxation from the applicability of penal provisions prescribed under Master Circular.
Accordingly, the listed entities whose due date for achieving MPS compliance falls between 01.04.2026 and 30.09.2026, no penal action shall be taken under the Master Circular for such non-compliance during this period. Further, any penal actions already initiated by stock exchanges or depositories against such entities for non-compliance with MPS requirements during the period from 01.04.2026 till the date of the MPS Circular, i.e. 07.04.2026 are required to be withdrawn.
The MPS Circular shall be applicable with immediate effect, i.e. from 07.04.2026.
SEBI introduces mechanism for lock-in of pledged shares for Ease of Doing Business.
SEBI through Circular dated 08.04.2026 ("EODB Circular")2 has introduced a mechanism for lock-in of pledged shares.
SEBI vide notification dated 21.03.2026 had amended the ICDR Regulations to provide that specified securities on which lock-in cannot be created may be recorded as "non-transferable" by depositories for the duration of the applicable lock-in period.
In the EODB Circular, SEBI notes that depositories have issued the framework to be followed by issuers and directs that stock exchanges, depositories, merchant bankers and issuers shall ensure compliance with the mechanism for lock-in of pledged shares.
The framework inter-alia requires: (a) Incorporation of suitable provisions in the Articles of Association for treating pledged shares as locked-in shares; (b) Issuance of necessary intimations to the concerned lenders or pledgees; and (c) Making suitable disclosures in the offer documents. stock exchanges, depositories, merchant bankers and issuers shall ensure compliance with the mechanism for lock-in of pledged shares.
The EODB Circular has come into force with effect from 08.04.2026.
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