SAST encumbrance disclosure: SEBI Regulation 31

A SAST encumbrance disclosure is what an Indian listed company's promoter files when shares are pledged, when a pledge is invoked, or when it is released. It sits in Regulation 31 of the SEBI Substantial Acquisition of Shares and Takeovers Regulations, 2011, separate from the acquisition and disposal disclosures in Regulation 29. A SAST encumbrance disclosure is the reason a pledge becomes a public, dated fact rather than a private arrangement between a promoter and a lender. This guide explains who files it, the seven working day clock, the depository carve-out, and the annual nil declaration. It is not investment advice.

Who files a SAST encumbrance disclosure, and when

Regulation 31(1) puts the obligation on the promoter of every target company, covering shares encumbered by the promoter or by persons acting in concert. Regulation 31(2) extends it to details of any invocation or release of that encumbrance.

Regulation 31(3) sets one clock for all three events. The disclosure is due within seven working days from the creation, invocation or release of the encumbrance, to every stock exchange where the shares are listed and to the target company at its registered office. That is a deliberately different deadline from Regulation 29, which allows two working days for an acquisition or disposal.

The depository carve-out

The most commonly missed part of Regulation 31 is a proviso inserted with effect from 1 April 2022. It states that the disclosure requirement in Regulation 31(1) does not apply where the encumbrance is undertaken in a depository. An identically worded proviso was inserted into Regulation 31(2) for invocation and release.

The practical consequence for anyone reading filings is that the absence of a Regulation 31 disclosure does not by itself prove the absence of an encumbrance. Depository-recorded encumbrances surface through other routes, including the encumbrance columns of the quarterly shareholding pattern. See how to check promoter pledging.

The annual nil declaration

Regulation 31(4), inserted with effect from 29 July 2019, requires the promoter to declare on a yearly basis that he, along with persons acting in concert, has not created any encumbrance, directly or indirectly, other than those already disclosed during the financial year.

Regulation 31(5) sets where that declaration goes, and the recipient list is unusual. It is due within seven working days from the end of each financial year to every stock exchange where the shares are listed, and to the audit committee of the target company. The audit committee, not the company at its registered office, is the named recipient.

What counts as an encumbrance

The Takeover Regulations read the term broadly, and the prescribed disclosure formats spell it out as pledge, lien, non-disposal undertaking and others. Regulation 29(4) then connects the two disclosure regimes: shares taken by way of encumbrance are treated as an acquisition and shares given upon release of encumbrance are treated as a disposal, with disclosures made accordingly.

That link matters when reading a filing, because it means a pledge can produce a Regulation 29 line as well as a Regulation 31 one, without any change in who economically owns the shares. For the instruments themselves, see what is promoter pledging and pledge vs non-disposal undertaking.

One naming trap is worth flagging. SEBI LODR also has a Regulation 31, and it governs the quarterly shareholding pattern. A reference to "Regulation 31" means encumbrance under the Takeover Regulations and the shareholding pattern under LODR, so the rulebook has to be named alongside the number. For the disclosure that ended in 2022, see SAST Regulation 30.

Flock reads Indian encumbrance and takeover disclosures alongside shareholding patterns, each one dated and linked to its source. What the data means for your money is your call to make.