Dematerialisation of Securities

Trishaljeet Singh
Trishaljeet Singh

Published on: Nov 10, 2023

Aakanksha Singhal
Aakanksha Singhal

Updated on: Dec 5, 2023

(16 Ratings)


Dematerialisation is the process of converting physical certificates into digital/electronic form. It is a process of having unique code by every issuer and an account of certificate holder with the Depository. A depository generally holds all the securities in electronic form as registered owner and certificate holder will be the beneficial owner, like every normal bank holds cash of account holder in bank account maintained with its branch. Dematerialisation is nothing but similar to depositing cash in bank account and doing electronic transactions in that account thereafter. Dematerialisation has its own benefits like eliminating the risk of any kind of fraud, loss of physical certificate, transparency among securities holders, proper record of issuance, transfer & disposal of any security, etc.


The provisions in respect of Dematerialisation of Securities are specified under the Companies (Prospectus and Allotment of Securities) Rules, 2014:

  1. Rule 9 – Dematerialisation of securities for all the Public Companies (effective from 1st April, 2014)
  2. Rule 9A – Dematerialisation of securities for all the Unlisted Public Companies (effective from 2nd October, 2018)
  3. Rule 9B – The much-required and anticipated amendment in the existing rules under the Companies Act, 2013 was notified by the Ministry of Corporate Affairs, mandating Dematerialisation of securities for Private Companies, effective from 27th October, 2023. By this amendment, all the Private Limited Companies other than Small Company and One Person Company, are required to dematerialise all of its securities latest by 30th September, 2024.

Key Amendments of Companies (Prospectus and Allotment of Securities) 2nd Amendment Rules, 2023

S/No. Public Companies (Which have issued Share Warrants prior to the commencement of the Act) Private Companies
1. Intimate details of warrants not converted to shares in Form PAS-7, up to 27th January, 2024 Issue securities in dematerialised form only, until 30th September, 2024 and thereafter
2. Require the bearers of such share warrants to surrender them and get them dematerialised in their accounts Facilitate dematerialisation of all of its securities, until 30th September, 2024
3. Notice in Form PAS-8, for the bearers of the share warrants as under:
  • On the company’s website
  • In vernacular language and English language newspaper
Up to 27th April, 2024
Private companies which cease to be a Small Company shall ensure dematerialisation of the entire holding of securities of its promoters, directors, KMP, before making any offer for:
  • issue of any securities or
  • buy-back of securities or
  • issue of bonus shares or
  • rights offer
4. Restriction placed for getting the entire holding of the securities dematerialised, prior to any transfer or subscription of securities being initiated by the holder of securities
5. Applicability of the provisions of sub-rule (4) to (10) of Rule 9A, mutatis mutandis:
  • Obtain ISIN for each type of security
  • Make timely payment of Admission as well as annual fees to the Depository and RTAs
  • Maintain security deposit of not less than 2 years fees, at all times, in the form as may be agreed
  • File Form PAS-6, on half-yearly basis

Process of Dematerialization of Securities

Unlisted Private Company can approach any Depository such as National Securities Depository Limited or Central Securities Depository Limited, for the purposes of admitting its securities, obtaining ISIN and offering Demat facility to its shareholders. Process to be followed:

Pass Board Resolution for admitting securities

Execution of Tri-partite Agreement between the Issuer entity, RTA and Depository

Submit duly filled Master Creation Form along with requisite documents*

Make Payment towards Joining Fees, Custodial Charges and other charges, if any

Issuance of ISIN to the Issuer Entity

* Note:

  1. The following documents are required to be furnished along with the application for admitting the securities of the Issuer entity with the Depository:
    • Board Resolution for admission of securities with either of the Depository, mentioning the details about authorized signatory(ies) and appointment of RTA, if any
    • Certified copy of the Certificate of Incorporation and Certificate of Incorporation pursuant to change of name of company, if applicable
    • Undertaking on the company’s letterhead duly stamped and signed by the authorized signatory (For Private Companies)
    • Certified Copies of Memorandum and Articles of Association
    • Certified true copy of Annual Report for the last financial year
    • Net worth Certificate from a Practicing Chartered Accountant/ Practicing Company Secretary
    • Tri-partite (for franking and e-stamping / on stamp paper) to be executed on non-judicial stamp paper or franking value of Rs. 600/- duly and DSC to be applied on first and last page
    • Certified true copy of GST Certificate, PAN Card of company, TAN (Depository Specific)
    • Soft & hard copy of security details in prescribed format Security Details – Equity (Depository Specific)
    • Declaration for freezing / unfreezing of securities (applicable in case of Private Limited Company) (Depository Specific)
    • Confirmation Letter from RTA (Depository Specific)
  2. Issuer entity can refer to the tariff details as provided below:


The Ministry of Corporate Affairs (MCA) has taken a prodigious step vide the Companies (Prospectus and Allotment of Securities) 2nd Amendment Rules, 2023, by bringing the private companies under the purview of requirement of dematerialization of securities. This step can truly be a welcome initiative leading to more transparency in respect of the business of the private companies which may be in a way was hidden till date leading to scams and frauds.

Abbreviations used

  1. Act – Companies Act, 2013
  2. MCA – Ministry of Corporate Affairs
  3. RTA – Registrar and Share Transfer Agent
  4. ISIN – International Securities Identification Number
  5. KMP – Key Managerial Personnel




The information provided in this article is intended for general informational purposes only and should not be construed as legal advice. The content of this article is not intended to create and receipt of it does not constitute any relationship. Readers should not act upon this information without seeking professional legal counsel.

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