By 30 September 2024, companies must convert all types of shares and debentures into dematerialized form by making the necessary application to a depository and securing International Security Identification Number (ISIN) for each type of security and shall notify all its existing security holders of this facility
The Ministry of Corporate Affairs (MCA) has taken a significant step towards transparency by issuing notification dated 27th October, 2023. This notification introduces new rules under the Companies (Prospectus & Allotment of Securities) Second Amendment Rules, 2023 making the dematerialization of shares mandatory for private companies.
MCA notification for dematerialization of shares of Private Limited Companies and it is very important for companies to comply with the notification of MCA to avoid penalties and other compliances issues.
MCA notification in brief
- Every Private Company other than a small company as on 31st March 2023 shall issue the securities only in Dematerialized Form
- All such companies to comply with the MCA notification by 30th September 2024
- Companies intending for Bonus, Buyback, ESOP, Rights shall ensure that before making such offer, the entire holding of securities of its promoters, directors, key managerial personnel has been dematerialized in accordance with provisions of the Depositories Act 1996 and regulations made there under
- Transfer, Purchase and Sell of shares can only happen in dematerialize form
Definition of non-small private limited companies?
- Companies whose paid-up capital is Rs. 4 Crores & above
- Turnover for preceding financial year is Rs. 40 Crores & above
The above notification is not applicable to following-
- Small private limited companies
- Nidhi Companies
- Government Companies
- Wholly owned subsidiaries of Public companies
Pushkar Mer 