Description

NSE implements 75% margin requirement for Shalimar Paints Limited due to high promoter and non-promoter share encumbrance under SEBI SAST Regulation 28(3).

Summary

NSE has issued surveillance measures for companies with high promoter and non-promoter share encumbrance as per Regulation 28(3) of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations 2011. Shalimar Paints Limited has been added to the surveillance framework effective December 12, 2025, requiring a minimum 75% margin in Equity and Equity Derivatives segments. No securities are being removed from the framework. The consolidated list now includes four companies under surveillance.

Key Points

  • Shalimar Paints Limited (SHALPAINTS, ISIN: INE849C01026) newly added to high encumbrance surveillance framework
  • Minimum 75% margin requirement applies to both Equity and Equity Derivatives segments
  • Margin applies to all open positions as on December 11, 2025 and new positions from December 12, 2025
  • No securities eligible for exclusion from the framework (Annexure II shows “Nil”)
  • Consolidated list includes 4 securities: Bedmutha Industries, B.L. Kashyap and Sons, Future Market Networks, and Shalimar Paints
  • Measure continues from previous circular NSE/SURV/51189 dated January 31, 2022
  • Framework subject to periodic review and works in conjunction with other prevailing exchange measures

Regulatory Changes

This circular continues the implementation of surveillance measures under SEBI (SAST) Regulation 28(3) which mandates disclosure of encumbrance on shares. The exchange uses this regulatory framework to impose additional margin requirements on securities where both promoter and non-promoter holdings show high levels of encumbrance, indicating potential financial stress or pledged shares that could impact market stability.

Compliance Requirements

  • Trading Members: Must ensure 75% minimum margin is collected for the affected security
  • Margin Application: Applies to all open positions as on December 11, 2025
  • New Positions: All positions created from December 12, 2025 onwards must have 75% margin
  • Scope: Margin requirement covers both Equity cash segment and Equity Derivatives segment
  • Queries: Trading members can contact NSE at surveillance@nse.co.in for clarifications
  • Note: Shortlisting under this measure should not be construed as adverse action against the company

Important Dates

  • December 09, 2025: Circular issue date (Circular Ref. No: 955/2025)
  • December 10, 2025: Effective date for exclusions from framework (none in this circular)
  • December 11, 2025: Last day for existing positions before new margin requirements
  • December 12, 2025: Implementation date for 75% margin requirement on Shalimar Paints Limited

Impact Assessment

Market Impact: The 75% margin requirement significantly reduces leverage available to traders in affected securities, likely resulting in reduced trading volumes and liquidity. For Shalimar Paints Limited, traders can now only leverage 1.33x (instead of typical 5x or higher), making intraday and derivative strategies less attractive.

Operational Impact: Brokers and trading members must update their risk management systems to enforce the higher margin requirements. Existing position holders may face margin calls if their current margins fall below 75%.

Investor Impact: Retail and institutional investors holding positions in Shalimar Paints will need to ensure adequate margin coverage or face potential position squaring. The measure reflects underlying concerns about share encumbrance levels, signaling potential financial stress that investors should monitor.

Consolidated Framework: With four securities now under surveillance (Bedmutha Industries, B.L. Kashyap and Sons, Future Market Networks, and Shalimar Paints), the exchange is actively monitoring companies with high encumbrance levels to protect market integrity.

Impact Justification

Mandatory 75% margin requirement significantly impacts trading in affected securities, restricting leverage and liquidity for all open and new positions.