The Ministry of Corporate Affairs (MCA) has officially extended the due date for the obligatory dematerialisation of securities for private companies. The updated due date has been extended to June 30, 2025, as per the updated notification issued dated February 12, 2025. The same amendment changes the Companies (Prospectus and Allotment of Securities) Rules, 2014, particularly Rule 98, which obligates the dematerialization for a particular class of private companies.
MCA Notification Highlights
Extension Until June 30, 2025
- From March 31, 2023, to June 30, 2025, the due date for the companies with Rule 9B(2) has been extended.
- It furnishes private companies (apart from small and producer companies) with much time to complete the dematerialization of securities and get an ISIN (International Securities Identification Number).
Rule Applicability
- All private companies, apart from small companies and producer companies, should follow the rule.
- Companies aiming to issue new shares, transfer shares, or make any revisions in their capital structure should perform the same merely in dematerialised form.
Amendment Objective
- Simplyfing the transition for private companies that have not complied till now.
- Ensuring effective market transparency and alignment with the obligatory structures for public companies.
- Streamlining easier investor participation and digital securities transactions.
Dematerialization of Shares
The process of converting physical share certificates and other securities into an electronic format is called Dematerialization, which removes the requirement of paper-based documents. These securities, after dematerialization, are held in a demat account, which performs like a digital repository for financial instruments.
A depository is an entity that carries securities in an electronic form and eases the transactions. It gives assurance of security, transparency, and ease of trading. Under the Depositories Act of 1996, depositories are governed and regulated by the Securities and Exchange Board of India (SEBI).
The two SEBI-registered depositories in India are:
Read Also:- Complete Procedure For Dematerialisation Of Shares Under RTA
Private Companies are required to dematerialise securities under Rule 9B
The Ministry of Corporate Affairs (MCA) in October 2023 introduced Rule 9B under the Companies (Prospectus and Allotment of Securities) Rules, 2014. For some private companies, the same regulation is obligatory to dematerialize their securities, aligning them with corporate governance standards relevant to public companies.
Attached below is the official notification from the Ministry of Corporate Affairs (MCA) regarding the deadline for mandatory dematerialization of private company shares.
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