SEBI has issued this circular to operationalise the mechanism for lock-in of pledged shares under the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 (ICDR Regulations). Following SEBI’s notification dated March 21, 2026 amending the ICDR Regulations, Depositories are now empowered to record specified securities as ’non-transferable’ during the applicable lock-in period, as an alternative to traditional pledge-based lock-in.

Key Points

• SEBI amended the ICDR Regulations on March 21, 2026 to allow securities on which lock-in cannot be created (due to existing pledge) to be recorded as ’non-transferable’ by Depositories for the duration of the lock-in period.
• Depositories have issued a framework for issuers to follow, including: incorporation of suitable provisions in the Articles of Association, issuance of necessary intimations to lenders/pledgees, and suitable disclosures in offer documents.
• Depositories have completed necessary system and process changes to implement this mechanism.
• The circular is issued under Section 11(1) of the SEBI Act, 1992 and Section 26(3) of the Depositories Act, 1996.

Regulatory Changes

The ICDR Regulations were amended on March 21, 2026 to introduce a new mechanism: specified securities on which a traditional lock-in cannot be created (because they are already pledged) may now be recorded as ’non-transferable’ by Depositories. This provides a practical alternative route for enforcing lock-in obligations on pledged shares, easing compliance burdens for issuers while maintaining investor protection.

Compliance Requirements

• Stock Exchanges: Must ensure compliance with the new lock-in mechanism for pledged shares.
• Depositories: Must implement the ’non-transferable’ marking for applicable securities during the lock-in period; systems and processes have already been updated.
• Merchant Bankers: Must ensure compliance with the mechanism and incorporate necessary disclosures in offer documents.
• Issuers: Must incorporate suitable provisions in their Articles of Association, issue necessary intimations to lenders/pledgees, and include appropriate disclosures in offer documents.

Important Dates

• March 21, 2026: SEBI notification amending ICDR Regulations issued.
• April 8, 2026: Circular issued; compliance with the new mechanism is effective immediately.

Impact Assessment

This circular has a moderate operational impact primarily on issuers undertaking public issues, their merchant bankers, depositories (NSDL and CDSL), and stock exchanges. It simplifies the process of complying with lock-in requirements when promoter/pre-IPO shares are pledged, removing a potential barrier to capital raising. For investors, it maintains the spirit of lock-in protections by ensuring pledged shares remain non-transferable during the applicable period. No specific listed companies or stock tickers are directly impacted; the change is procedural and systemic in nature.