Demat of Shares
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Professional assistance and application support included.
Government fees and third-party charges apply where mentioned.
Dematerialisation converts physical share certificates into securities held electronically in a Demat account. It simplifies share management and trading while reducing the risks of loss, theft, damage, and forgery.
The supplied content states that dematerialisation, previously required mainly for public companies, became mandatory for Private Limited Companies other than small companies, with a 30 September 2024 deadline for companies following the standard financial year.
LegallensIndia assists companies in converting physical shares into electronic holdings through a guided and streamlined process.
Dematerialisation is the conversion of physical securities, including share certificates and other documents, into an electronic format held in a Demat account.
A depository can hold shares, bonds, government securities, and mutual-fund units electronically. A registered Depository Participant acts as the intermediary providing depository services under the Depositories Act, 1996.
India has two SEBI-registered depositories: National Securities Depository Limited and Central Depository Services (India) Limited.
In October 2023, the Ministry of Corporate Affairs introduced the Companies (Prospectus and Allotment of Securities) Second Amendment Rules, 2023. Rule 9B requires Private Limited Companies, except small and Government companies, to dematerialise their securities.
All public companies in India must dematerialise their shares.
Private Limited Companies must comply unless they qualify for the small-company exception.
A private company that is a holding company or subsidiary of another body corporate must dematerialise its shares regardless of the financial thresholds used for small companies.
The supplied content defines a small company as a Private Limited Company with paid-up capital of ₹4 crore or less and turnover not exceeding ₹40 crore in the preceding financial year.
Such a company is exempt from mandatory dematerialisation unless it is a holding or subsidiary company, in which case the exemption does not apply.
Modify the AOA to permit shareholders to hold shares electronically and establish the legal basis for dematerialised holdings.
Select a SEBI-registered Registrar and Transfer Agent to manage the process between shareholders and the depositories.
Obtain a unique International Securities Identification Number for every class or type of share issued by the company.
Direct shareholders to open Demat accounts through a Depository Participant, such as a bank or brokerage firm.
Coordinate with the RTA to authenticate ownership and convert existing physical certificates into electronic form.
Ensure that shares held by promoters, directors, and Key Managerial Personnel are dematerialised.
Submit half-yearly Form PAS-6 returns to the MCA with details of the company's dematerialised securities.
| Financial Year End | Deadline Stated in the Content |
|---|---|
| 31 March 2023 | 30 September 2024, 18 months later |
| 31 December 2023 | 30 June 2025, 18 months later |
Open an account with a Depository Participant, which is commonly a bank, broker, or other intermediary between the investor and depository.
Complete the account-opening form with clear bank details, including the account number, IFSC, bank and branch name, and branch address.
Obtain the Demat Request Form from the DP, complete and sign it, and ensure the names and signatures match the share certificates and company records.
Submit the form with the original physical share certificates.
The relevant authorities verify the information in the request and the physical certificates.
After the DP approves the documents, a Dematerialisation Request Number is issued as confirmation of the request.
The DP forwards the request to the company's Registrar and Share Transfer Agent for approval.
After RTA approval, the physical certificates are converted into electronic securities and destroyed to prevent misuse.
The electronic shares are credited to the shareholder's Demat account and can then be sold or transferred as required.
LegallensIndia provides end-to-end assistance for dematerialising shares through NSDL or CDSL, including the required procedures and documentation.
The service helps companies move to a secure and accessible digital shareholding structure through a smooth transition.