Regulation of bank advances against shares requires transfer of title and exclusive voting rights or recall of loans. Banks must ensure advances secured by shares (above an exempted limit) result in transfer of the shares into the bank's name with exclusive voting rights exercisable without restriction; where contractual restraints exist banks must notify borrowers, substitute agreements removing such restraints or recall the advance if borrowers refuse. Composite securities must be segregated to apply share-specific rules; advances against partly paid shares require prior regulatory approval; voting by banks on pledged shares is restricted without prior authorization. Short-term broker-held shares and smaller advances are exempted to avoid operational hardship.
Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
Provisions expressly mentioned in the judgment/order text.
Regulation of bank advances against shares requires transfer of title and exclusive voting rights or recall of loans.
Banks must ensure advances secured by shares (above an exempted limit) result in transfer of the shares into the bank's name with exclusive voting rights exercisable without restriction; where contractual restraints exist banks must notify borrowers, substitute agreements removing such restraints or recall the advance if borrowers refuse. Composite securities must be segregated to apply share-specific rules; advances against partly paid shares require prior regulatory approval; voting by banks on pledged shares is restricted without prior authorization. Short-term broker-held shares and smaller advances are exempted to avoid operational hardship.
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