Demat of Shares

Converting physical share certificates into electronic form held in a depository. Under rule 9B of the Companies (Prospectus and Allotment of Securities) Rules, 2014, every private company that is not a small company must issue securities only in demat form and facilitate dematerialisation of all of them.

It is mandatory if you are not a small company under section 2(85). A small company is a private company with paid-up capital of not more than ₹4 crore and turnover of not more than ₹40 crore, and which is not a holding or subsidiary company, not a section 8 company, and not governed by a special Act. Government companies are excluded from rule 9B altogether by sub-rule (6).

Not necessarily, and this is the most common misconception. Rule 9B(2) is a rolling test: it applies to the last day of any financial year ending on or after 31 March 2023 in which the company was not small, and allows eighteen months from the close of that year. The first cohort's date was moved to 30 June 2025 by G.S.R. 131(E). A company that was not small as at 31 March 2025 has until 30 September 2026; one first crossing at 31 March 2026 has until 30 September 2027.

The rule's own consequences are transactional rather than a stated rupee penalty. A holder cannot transfer securities without dematerialising them first, and the company cannot make any offer of securities, buyback, bonus issue or rights offer until its promoters', directors' and key managerial personnel's entire holdings are in demat form. In practice that means a share sale or funding round stops until the ISIN is in place.

No. A proviso inserted by G.S.R. 583(E) dated 20 September 2024 gives a producer company covered by rule 9B(2) five years from the close of the relevant financial year, instead of eighteen months.

An International Securities Identification Number — a unique code for each class of the company's securities, created with a depository (NSDL or CDSL) as part of going demat.

A Registrar and Transfer Agent, which manages the demat process and shareholder records. Appointing one and executing the tripartite agreement with the depository is part of the setup.

PAS-6 is the half-yearly reconciliation of share capital audit report. Rule 9B(5) applies rule 9A's sub-rules (4) to (10) to private companies, and MCA's PAS-6 instruction kit names rule 9A and 9B as its governing law, with filing due within sixty days from the conclusion of each half year and certification by a company secretary or chartered accountant in practice. Small, Nidhi and government companies and wholly owned subsidiaries of unlisted public companies are excluded.

Typically a few weeks to appoint the RTA, execute the agreements and obtain the ISIN. Conversion of individual holdings continues as shareholders open accounts and surrender certificates, so start well before any transaction depends on it.

Yes, to hold their shares electronically. We guide them on opening accounts, but the company cannot open them on their behalf.

Our coordination fee, plus depository and RTA charges billed by those parties. Those are commercial prices with no statutory rate, so we quote actuals rather than publish a figure. The half-yearly PAS-6 carries the normal MCA filing fee on the nominal share capital scale.

An applicability opinion against your audited figures, depository and RTA onboarding, the ISIN for each class of securities, conversion support, and the PAS-6 filing if you opt for it.