MCA in its drive to enhance transparency, investor protection and corporate governance, has notified Companies (Prospectus and Allotment of Securities) Third Amendment Rules, 2018 on 10 September 2018 effective from 02 October 2018. In accordance with the said rules, unlisted public companies need to dematerialize their existing securities and ensure that further issue of securities and transfers are only in dematerialized form. MCA is expected to tighten the norms for Private Limited Companies as well by bringing in the applicability of Dematerialising the Securities for Private Limited Companies as well
Procedure for Dematerialisation of the Securities of the Company
Step 1 (5-10 Working Days)
The Board of Directors is required to approve the Dematerialisation of the Securities of the Company and appoint the Third Party Agent for the purpose of obtaining the connectivity with the respective Depository Participants for Dematerialisation of the Securities of the Company and process all necessary Applications, Documents, etc for obtaining the said connectivity.
Step 2 (15-20 Working Days)
Post submission of the above- mentioned documents with the respective Depository Participants, they shall review all the documents and allot the ISIN Number to the Company within 15-20 working days on submission of all the required documents.
Step 3 (5-10 Working Days)
Upon obtaining the ISIN Number, The Shareholders of the Company shall submit their Physical Share Certificates to their agent along with the requisites forms to obtain the Credit of the Shares held by them in the Company in their respective Demat account. Benefits of Dematerialisation of the Securities of the Company One of the major benefits that will be available to Unlisted Public and Private Limited Companies on dematerialization is savings in Stamp Duty.
The following are the other benefits available to the Company:
- Elimination of risk of duplication, theft, fraud, and loss with respect to physical share certificates.
- Enhancement of transparency in ownership, preventing mal-practices, such as benami shareholding, back dated issuance of shares/ transfers.
- Ease in transfer and pledge of securities.
You can conveniently manage your shares and transactions from anywhere - Due to the elimination of paperwork, the time required for completing a transaction gets reduced.
For further queries, reach out to cs@vcmv.in
