The Ministry of Corporate Affairs (MCA) has extended the deadline for the mandatory dematerialization of shares for private limited companies (other than small companies) to June 30, 2025. This extension applies to private companies not classified as small companies as of March 31, 2023.
The amendment modifies Rule 9B of the Companies (Prospectus and Allotment of Securities) Rules, 2014, and provides additional time for companies to comply with the dematerialization requirements. Initially, the deadline was September 30, 2024, but it has now been pushed back to give businesses more time for implementation. The move is intended to enhance transparency, streamline securities management, and reduce risks associated with physical share certificates, such as loss or forgery.
Key Takeaways:
- Private companies (excluding producer companies and small companies) must dematerialize their securities by June 30, 2025.
- Companies need to facilitate their shareholders in converting physical shares into electronic form by opening DEMAT accounts with depositories like NSDL/CDSL.
- The dematerialization rule aligns private companies with regulatory expectations applicable to listed entities.
