Legal Support by Nd Salva
With the introduction of Rule 9B under the Companies Act, 2013, dematerialisation of shares has become mandatory
for most private limited companies in India. As companies move from physical to electronic shareholding, compliance with SEBI,
MCA, NSDL, and CDSL guidelines is essential.
At Nd Salva, we provide complete legal and regulatory support to ensure your company’s transition to Demat shares
is smooth, compliant, and fully aligned with the latest statutory requirements.
What is Dematerialisation of Shares?
Dematerialisation converts physical share certificates into electronic form, stored in a Demat account through NSDL or CDSL.
This ensures higher security, transparency, and ease of transfer. All demat activities in India are governed by the
Depositories Act, 1996.
- NSDL – National Securities Depository Limited
- CDSL – Central Depository Services (India) Limited
Mandatory Dematerialisation – Rule 9B
- All new securities must be issued only in Demat form
- All existing physical shares must be converted to Demat
- Promoters and directors must dematerialise their holdings first
- No transfer or subscription allowed unless shares are in Demat
- Non-small private companies must comply by September 30, 2024
- Companies ceasing to be small companies must comply within 18 months
Applicability
- All Public Companies
- Private Companies (except small companies)
- Holding Companies
- Subsidiary Companies
Small Company Exemptions
- Paid-up capital = ?4 crore
- Turnover = ?40 crore
- Holding and subsidiary companies are NOT exempt
Benefits of Dematerialisation
Improved Security
No risk of theft, loss, duplication, or forgery.
Faster Transactions
Instant transfer, allotment, and verification.
Cost Savings
No printing, courier, or manual record-keeping costs.
Anywhere Access
Shareholders can view holdings online anytime.
Automatic Corporate Actions
Bonus, splits, dividends auto-credited.
Pledge Facility
Easy to pledge shares for loans or financing.
Dematerialisation Process for Companies
- Amend Articles of Association (AoA): Add demat enabling clauses
- Appoint SEBI-Registered RTA: Registrar handles verification
- Obtain ISIN: Mandatory identification number for each class of shares
- File PAS-6: Half-yearly Demat compliance report with MCA
Dematerialisation Process for Shareholders
- Step 1: Open a Demat account with a Depository Participant (DP)
- Step 2: Submit DRF (Demat Request Form) with original certificates
- Step 3: DP verifies and issues DRN (Request Number)
- Step 4: RTA validates and confirms
- Step 5: Shares credited into Demat account electronically
Penalties for Non-Compliance
- Company: Fines up to ?2 lakh and bar on issuing shares
- Officers in Default: Fines up to ?50,000
- Shareholders: Cannot transfer or subscribe unless shares are dematerialised
Why Choose Nd Salva?
- End-to-end dematerialisation support
- AoA amendments & drafting
- RTA coordination with NSDL/CDSL
- ISIN application and approval
- PAS-6 preparation & MCA filings
- Demat advisory for promoters and shareholders