Though promoters would also be using it when they pledge shares and misusing the practice ( see Promoters' scourge..) the concept of negative lien is one of the few best practices we mainain that make prime borkerage and lending against shares as alo various agreemens with capital market intermediaries..self regulating. Any lien on yor shares should not mean they can be sold as collateral the day there is a drop in your margin without allowing extra days on penal interest andor chances to repay on a reaonable basis.

Also, this avoids mass sell off of securities in disused accounts if used as larger operations organisations like the NSDL , offshore and distributed globa l ops and direct brokers try to walk a thin line between chicanery and 'best for the customer' Given the complexity of such contracts and necessary flexible conditions on higher value accounts where the fine print gets distributed between different departments, there would be no greater disservice than if your shares are sold off without your knowledge and or without due notice

Negative lien implies distinctly that the lien marked to the lender/contract excuor/holder does not allow such entityindividuals to dispose off the sahres making it mandatory for the owner to sign them off his securities account

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