MCA extends deadline for private companies to convert physical shares into electronic form

The ministry of corporate affairs (MCA) has given an extension for private companies to convert their physical shares into electronic form by June 2025. The extension has come as two depositories NSDL (National Securities Depository Limited) and CDSL (Central Depository Services Limited) have a huge backlog of applications from companies to deal with.

Experts said that many of the private companies have applied for dematerialisation which was notified by the MCA in August 2023. “The enforcement of the notification witnessed a slew of applications for dematerialisation with depositories which increased their task. With almost 1.7 million active private companies in India, the implementation ask on effective date being September 30, 2024, was not commensurate with the magnitude of applications requiring the depositories’ attention,” said Sandeep Jhunjhunwala, M&A tax partner at Nangia Andersen LLP.

ALSO READHonasa Consumer beats estimates; revenue up 6%

MCA amended the companies (prospectus and allotment of securities) rules, 2014 to introduce Rule 9B which mandated private companies – barring small (with a turnover below Rs 40 crore and a paid-up capital below Rs 4 crore) and government companies – to dematerialise their shares in about a year.

“The extension clears the shadow of non-compliance cast on private companies who are still waiting in queue for their applications to be cleared by the depositories. The blanket extension appears to ringfence even those companies who had not filed an application seeking dematerialisation. Such companies seem to have been given an extended window to now file for dematerialisation and still be compliant with the law,” said a corporate lawyer.

Experts said that dematerialisation can benefit all stakeholders, including companies, investees and regulators. 

Gautam Adani’s renewable energy park along Pak border raises national security concerns: Report

For instance, in the case of companies, having demat shares removes the risks associated with physical share certificates, such as loss, theft, mutilation and forgery. It also strengthens the credibility of securities when offered as collateral, and leads to swift investment exits for shareholders. In the case of regulators, it helps keep a watch on benami share transactions, conduit or shell companies in addition to minimising the cases of duplication of securities created to raise finance on collateral or cases of improper share pledges.

 » Read More

Related Articles

Flexi cap funds vs Multi cap funds: Which is an appropriate choice during volatile times

In September 2024, I wrote a piece, ‘Flexi Cap Funds v/s Multi Cap Funds: Which Is Better at a Market High?’. The valuations of the Indian equity market then were exceptionally high: the BSE SmallCap P/E and BSE MidCap P/E were at around 36x and 34x, respectively, while the BSE LargeCap Index was nearly 26x.

Top 10 mutual funds holding IndusInd Bank may take a Hit: Do you own these?

Indian banking has witnessed various challenges over the last few years, from mounting non-performing assets (NPAs) to regulatory action and issues of corporate governance. Banks are generally considered pillars of country’s financial stability, and thus any disruptions within prominent banks could have extensive ramifications. Institutional investors, regulators, and analysts are keenly watching such events because

High demand for adventure, once-in-a-lifetime trips

If sixty is the new forty, the travel industry is making the most of it, offering curated packages for the sexagenarians, septuagenarians and even octogenarians. From cruises to skiing, Europe to Japan, there is something for everyone, even a trip to Antarctica. Booking.com’s Travel Predictions 2025 suggest baby boomers (those born between 1946 and 1964)

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Stay Connected

0FansLike
0FollowersFollow
0SubscribersSubscribe
- Advertisement -

Latest Articles

Flexi cap funds vs Multi cap funds: Which is an appropriate choice during volatile times

In September 2024, I wrote a piece, ‘Flexi Cap Funds v/s Multi Cap Funds: Which Is Better at a Market High?’. The valuations of the Indian equity market then were exceptionally high: the BSE SmallCap P/E and BSE MidCap P/E were at around 36x and 34x, respectively, while the BSE LargeCap Index was nearly 26x.

Top 10 mutual funds holding IndusInd Bank may take a Hit: Do you own these?

Indian banking has witnessed various challenges over the last few years, from mounting non-performing assets (NPAs) to regulatory action and issues of corporate governance. Banks are generally considered pillars of country’s financial stability, and thus any disruptions within prominent banks could have extensive ramifications. Institutional investors, regulators, and analysts are keenly watching such events because

High demand for adventure, once-in-a-lifetime trips

If sixty is the new forty, the travel industry is making the most of it, offering curated packages for the sexagenarians, septuagenarians and even octogenarians. From cruises to skiing, Europe to Japan, there is something for everyone, even a trip to Antarctica. Booking.com’s Travel Predictions 2025 suggest baby boomers (those born between 1946 and 1964)

Zetwerk IPO at least 15 months away: CEO

Contract manufacturing marketplace Zetwerk Manufacturing Businesses is eyeing an initial public offering (IPO) within the next 15 to 24 months, a senior company official said. “I don’t know if it (IPO) will happen this year. We are looking to file. We are doing all the preparation work, but I think 15 to 24 months is

E-commerce under fire; uncertified products seized in BIS raids on Amazon, Flipkart warehouse

The Bureau of Indian Standards (BIS) has conducted raids on warehouses operated by major e-commerce platforms, including Amazon and Flipkart, resulting in the seizure of thousands of uncertified consumer products, according to the consumer affairs ministry. Key seizures from Amazon and Flipkart  On March 7, BIS officials raided an Amazon warehouse in Lucknow, confiscating 215