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Dematerialization of Securities by Private Limited Companies

The Ministry of Corporate Affairs, vide notification dated October 27, 2023, has made it mandatory for all private limited companies (other than small companies) to facilitate the dematerialization of securities (shares, debentures, etc.) on or before September 30, 2024.

UJA | Dematerialization of Securities by Private Limited Companies Internal
The key points of the notification are mentioned hereunder:
  • Every private company other than a small company shall facilitate the dematerialization of all its securities on or before September 30, 2024.
  • Issue of securities after September 30, 2024, only in dematerialized form;
  • In case a company makes an offer for the issue or buyback of securities or shares after September 30, 2024, it shall ensure that before making an offer for the issue or buyback of securities or shares, the entire holding of its promoters, directors, and key managerial personnel has been dematerialized.
  • Every shareholder who intends to transfer shares or subscribe to the shares or securities of private companies after September 30, 2024, is mandatorily required to convert his or her entire shareholding into dematerialized form before the transfer or application to a new issue.
  • This notification shall amend the Companies (Prospectus and Allotment of Securities) Rules, 2014 and the amended rules shall be called as the Companies (Prospectus and Allotment of Securities) Second Amendment Rules, 2023
Key amendments applicable to public limited companies:
  • Every public company that has issued share warrants prior to the commencement of the Companies Act, 2013 shall, within a period of 3 months, inform the Registrar of the details of such share warrants and, within a period of 6 months, get the share warrants dematerialized by issuing notices to the share warrant holders in Form PAS-8.
  • In case of non-conversion of the share warrants in dematerialized form by the warrant holders within the prescribed time limits, the company shall suo-moto convert the share warrants in dematerialized form, and the underlying shares will be transferred to the Investor Education and Protection Fund (IEPF).
  • These rules shall not be applicable to Government Companies;

Complete notification attached here

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