Encumbrance

    ESG & Governance

    Any arrangement that restricts a shareholder's freedom to sell shares or gives someone else a claim over them.

    Under SEBI's Takeover Regulations, encumbrance covers pledges, liens, negative liens, non-disposal undertakings and similar arrangements. Promoters must report the creation, invocation and release of any encumbrance within seven working days. The wider definition exists because arrangements other than pledges can carry the same risk of forced sale or loss of control.

    Related terms

    Pledged sharesNon-disposal undertaking (NDU)Promoter holding

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