The Dematerialisation of Shares by Private Companies - MCA’s Rule 9B

The recent mandate by the Government of India requires private companies to dematerialise their physical shares by Sept 30, 2024. This means that private companies, excluding small companies, will be required to convert all issued physical share certificates into digital form.

For clarity, a small private company is defined as a company with a paid-up capital of less than ₹4 crore and a turnover of less than ₹40 crore.

Companies that do not meet the criteria for being classified as small based on their financial records at the end of a financial year ending after March 31, 2023, must adhere to these rules within 18 months after the end of that financial year.

It's important to note that opening and maintaining demat accounts come with associated fees.

Non-compliance with the dematerialisation mandate could lead to various consequences and penalties. While there are no specific penalties outlined for non-compliance with Section 29 of the Companies Act and Rule 9B of the PAS