MCA Notification on Dematerialisation of Shares of Private Limited Companies

-By Megha Gupta

New rules pertaining to share certificates in India came into effect from October 2023 meaning that private limited companies will need to issue and convert shares into dematerialized (Electronic Format) form by September 30, 2024.

This move aims to enhance transparency for government agencies, enabling better tracking of shareholders and ensuring payment of appropriate taxes.  It also enhances the ease of business removing physical paperwork as well as reducing legal issues related to fake share transfers.

Importantly it also provides shareholders with better visibility of shares and of course less risk of damage, or fraud associated with physical certificates.

So what does this mean for your Indian Business?

·        By 30 September 2024, all private limited companies must convert all types of shares into dematerialized form.
·        Indian entity to file application with a Depository and secure ISIN
·        Appoint RTA to convert all its existing securities into dematerialised form.
·        Company must file half year return with ROC

If a company fails to comply then they will not be able to issue/allot any type of securities, they won`t be able to transfer or subscribe for any type of security.  They also risk penalties of up to 200,000 INR (£2000).

Our experts are of course on hand to help you understand these changes and support you in making sure you are compliant.  Please feel free to get in touch with megha.gupta@ukibc.com.

UKIBC helps businesses of all sizes and at all stages of growth to enter India. We have supported over 500 UK companies on their India journey to date. See more information here: Incorporating In India – UK India Business Council (ukibc.com)