Referring to the MCA notification dated October 27, 2023, and February 12, 2025, regarding the issuance of securities in dematerialized form by Private Companies and facilitating the dematerialization of all their Securities.
Following the amendment to the Companies (Prospectus and Allotment of Securities) Second Amendment Rules, 2023, a new rule has been inserted after rule 9A, known as “9B – Issue of Securities in Dematerialized Form by Private Companies.” This rule mandates that:
1. Every Private company, except for small companies, shall issue securities exclusively in dematerialized form and facilitate the dematerialization of its securities, in accordance with the provisions of the Depositories Act, 1996, and the accompanying regulations.
2. Private companies that are not considered small companies, as per audited financial statements ending on or after March 31, 2023, must comply with this rule by June 30, 2025
3. Private companies referred to in sub-rule (2), making any offer to issue securities, buyback securities, or issue bonus shares or rights offers after the compliance date must ensure that the entire holding of securities of its promoters, directors, and key managerial personnel is dematerialized in accordance with the Depositories Act, 1996, and related regulations.
4. Any holder of securities of a private company referred to in sub-rule (2) who intends to transfer such securities after the compliance date must dematerialize them before the transfer. Also, anyone subscribing to securities of the concerned private company after the compliance date, whether by private placement, bonus shares, or rights offers, must ensure that all their securities are held in dematerialized form before such subscription.
Pushkar Mer 