INSITE - India- Feb 2026

SEBI MANDATES NOTICE BEFORE SALE OF PLEDGED SECURITIES

Summary: On 5 February 2026, the Securities and Exchange Board of India (SEBI) issued a circular strengthening the framework for creation and invocation of pledges over securities held in the depository system. The amendments align pledge procedures with Sections 176 and 177 of the Indian Contract Act, 1872, mandate a standardized pledge request form, and require pledgees to provide prior notice before selling pledged securities.

In Detail: SEBI, through a circular dated 5 February 2026, has strengthened the regulatory framework governing the creation and invocation of pledges over securities held through the depository system. The circular amends the SEBI Master Circular for Depositories and introduces specific safeguards aligned with Sections 176 and 177 of the Indian Contract Act, 1872.

Under the revised framework, depositories must ensure that pledge request forms include explicit undertakings by the pledgee to provide reasonable notice to the pledger prior to the sale of pledged securities and to comply with applicable contractual and regulatory requirements. A standardized pledge request form is now mandated across all depositories. Additionally, upon invocation of a pledge, depositories are required to immediately notify both the pledger and pledgee, confirming the invocation and recording of the pledgee as the beneficial owner.

Depositories have been directed to amend their bye-laws, update operational systems, and notify participants to ensure compliance. The revised framework must be implemented on or before 6 April 2026, with the stated objective of enhancing transparency, legal certainty, and investor protection in pledge transactions.

Key Links: SEBI | Creation/Invocation of pledge of securities through depository system.

INDIA’S KYC REQUIREMENT FOR DIRECTORS NOW ONCE EVERY 3 YEARS

Summary: The Ministry of Corporate Affairs (MCA) has revised the KYC compliance requirement for company directors, changing it from an annual filing to once every three years, effective 31 March 2026. A simplified consolidated form (DIR-3-KYC-Web) has been introduced, allowing directors to complete KYC, update personal details, and reactivate their DIN through a single filing.

In Detail: India’s MCA has revised the mandatory know-your-customer (KYC) compliance framework for company directors, shifting the requirement from an annual filing to once every three years, effective 31 March 2026. The reform follows recommendations from the High-Level Committee on Non-Financial Regulatory Reforms and stakeholder consultations, with the objective of reducing compliance burdens and streamlining administrative processes.

To operationalise the change, the MCA has introduced a simplified, consolidated KYC form designed to serve multiple purposes. The new form may be used not only for periodic KYC compliance but also for updating key particulars such as mobile number, email address, and residential address, as well as for reactivating a Director Identification Number (DIN). The DIN a unique eight-digit number issued by the MCA remains valid for the lifetime of a director across different companies.

Under the revised framework, directors must update any changes in their particulars within 30 days. The amendments, notified under the Companies (Appointment and Qualification of Directors) Amendment Rules, 2025, replace the earlier e-form DIR-3-KYC and DIR-3 KYC-WEB service with a single consolidated form, DIR-3-KYC-Web, reflecting administrative simplification. Directors who have already completed their annual KYC filing may submit their next KYC by 30 June 2028 under the new three-year cycle.

Key Links: Press Release:Press Information Bureau

India’s KYC requirement for directors now once every 3 years | Law.asia