Companies Act, 2013

Unlisted Public Companies Entailing Reconciliation of Share Capital in Demat Form

Pragya Lalwani

Not only the listed companies but also the unlisted public companies are required to dematerialise its securities w.e.f. 2-10-2018. Now, the Companies (Prospectus and Allotment of Securities) Third Amendment Rules, 2019, dt. 22-5-2019 further requires the unlisted public companies to file reconciliation of share capital audit report for each half year. Provisions regarding the same are enlightened in this write up.

1. Introduction

Rule 9A of the Companies (Prospectus and Allotment of Securities) Rules, 2014 made it mandatory for all unlisted public companies to issue their securities only in dematerialised form and facilitate dematerialisation for all the existing securities in accordance with Depositories Act, 1996 and regulations made thereunder,w.e.f. 2-10-2018. Even the transfers made thereafter could only be done when securities get dematerialised. Thus, not only the listed companies making public offer but also unlisted public companies have to comply with the provisions of the Depositories Act, 1996 and the Securities and Exchange Board of India (Depositories and Participants) Regulations, 2018 issued in that behalf, except Nidhi company, Government company and wholly-owned subsidiary company. Further, w.e.f. 30-9-2019 the unlisted public companies would be required to submit reconciliation of share capital audit report for each half year ending on 30^th September and 31^st March in every financial year. Such path-breaking step of the Government would enhance transparency and corporate governance among business world in India.