Dematerialisation of securities : Mandate for Unlisted Public Companies

Pragya Lalwani

Apart from listed companies even unlisted public companies are now mandated to facilitate dematerialisation of its securities, both existing and new and comply with the Depositories Act, 1996 and Regulations made with respect thereto. Compliances with respect thereto have been penned down in this write up.

1. Introduction

Dematerialisation is a process of converting physical securities into electronic form. With the insertion of Rule 9A vide Companies (Prospectus and Allotment of Securities) Third Amendment Rules, 2018 by Ministry of Corporate Affairs, it is compulsory for all unlisted public companies to issue their securities only in dematerialised form and facilitate dematerialisation for all the existing securities, w.e.f. 2-10-2018. Thus, not only public companies making public offer but also unlisted public companies have to comply with the provisions of Depositories Act, 1996 and Regulations issued by Securities and Exchange Board of India (SEBI) in that behalf. Currently, there are only two depositories registered and licensed to facilitate demat services viz., National Securities Depository Ltd.(NSDL) and Central Depository Services (India) Ltd.(CDSL).