Mandatory DEMAT of Private Limited Securities
The Ministry of Corporate Affairs vide amendment to the Companies (Prospectus and Allotment of Securities) Rules, 2014 had mandated dematerialisation (demat) of securities to private limited companies.
Deadline of compliance:
Within eighteen months of that financial year’s closure (i.e. if your FY closure is on 31st March 2023 then the due date is 30th September 2024). demat
Eligible private limited companies are required to facilitate the dematerialization of all their securities by September 30, 2024, and any issue of securities can be only in demat form. demat
Promoters’ Shares:
Entire securities held by the promoters, directors & key managerial personnel shall be demat before any buyback or issue of securities. demat
Exemption:
Government Companies and companies which are small-sized as per the Financial Statements on 31st March 2023 are exempted. demat
Implications of the amendment:
- Amendment to Articles of Association to enable demat of securities
- Change in stamp duty
- Compliance cost for changing to and maintaining the securities in demat
- Seven months period out of eighteen months given for compliance is already over
- Restriction on the transfer of shares will become complicated
- Tracing all the shareholders
To understand how the new amendment on demat will impact your company please reach out to us @ info@saspartners.com
