Every Private Company other than Small Company required to Demate it's share Capital within 18 month

The Ministry of Corporations (MCA) has mandated that all private enterprises except small businesses have to withdraw their share capital within 18 months from March 31, 2023, i.e., September 30, 2024

This means that all private companies except small companies must convert their share certificates into electronic form.

The reasons for MCA’s policy:

MCA aims to provide transparency and efficiency in the corporate sector.

Dematerialization of share capital facilitates the pursuit of shareholder plans and facilitates the transfer of shares between shareholders.

The high spurious share in the market acts as a deterrent.

Benefits of dematerialization of share capital:

Reduced costs:

• Dematerialization helps companies reduce the costs associated with printing, issuing, and transferring physical certificates.

• Enhanced security:

• Non-physical parts are more secure because they are less likely to be lost, stolen or counterfeited.

• Improving Process Transparency:

• Dematerialization enhances shareholder transparency when all shares are recorded electronically.

• Water Enhancement:

• Unpackaged shares are more liquid, making them easier to transfer between shareholders.

MCA’s resources:

• MCA provides resources to help companies devalue their share capital, e.g.

• A detailed guide to the dematerialization process.

• Names of deposit participants (DPs) who played key roles in the conversion.

Dematerialization process for companies:

Companies can follow these steps to build their share capital needs:

• Select a DP.

• Open a demat account with DP.

• Send the physical part certificates to DP.

• DP will dematerialize the shares and give credit to the company