Share Pledge Trustee Agreement

(ii) the loan agreement contains a clause requiring the creation of a tax on the financial guarantee against which the loan is contracted by the borrower Recently, it was decided to allow Class AD I (Authorized Dealers) banks to “raise no objections” under the Foreign Exchange Management Act (FEMA), 1999, for the creation of fixed asset fees. Financial guarantees and the issuance of corporate or private guarantees to the foreign lender/trustee in order to guarantee the ECB to be contracted by the borrower. Before not objecting, AD Bank should ensure that: (i) The life of the underlying ECB, as regards the duration of the pledging of shares in Regulation 29, relates to the creditor`s disclosure obligations. The Regulation provides that in the event of the acquisition or disposal of shares or voting rights by the purchaser or a person of the offeree company acting jointly with him, his or her voting rights and/or his total holding in that target company must be disclosed within ten working days of the acquisition of those shares or voting rights. Disclosure takes place: the seizure of shares is usually visible in companies that have a strong participation of promoters. Like most problems, stock entry has its pros and cons. On the pro side, it can be argued that even if the company`s shares are mortgaged, the company has rising cash flows and has promising prospects for the future, pledges should not be considered a problem. On the other hand, stock seizure is a sign of poor company credibility, poor cash flow and the company`s inability to meet its short-term requirements. The increasing seizure of shares is dangerous not only for promoters, but also for shareholders. Ultimately, investing in companies cannot be considered a problem with 5-10% of shares mortgaged, but the investor should also exercise caution. In order to protect the interests of existing shareholders, SEBI has adopted certain provisions. These provisions mainly concern the disclosure obligations imposed by the holder of pledges and the holder of pledges in respect of mortgaged shares.

This happens because pledging shares by developers can result in a change of ownership if the developer is unable to repay the loan. The SAST rules clearly state in Regulation 28 that the burden of the shares would include the seizure of shares.. . . .