Dematerialization/ ISIN Due Date Extended to June 30, 2025

Dematerialization/ ISIN Due Date Extended to June 30, 2025. The Ministry of Corporate Affairs (MCA), through its latest notification dated February 12, 2025, has officially extended the deadline for compliance with the dematerialization (demat) of securities for certain private companies. The new deadline for compliance has been set for June 30, 2025. This amendment has been introduced through the Companies (Prospectus and Allotment of Securities) Amendment Rules, 2025, modifying Rule 9B of the Companies (Prospectus and Allotment of Securities) Rules, 2014.
Dematerialization Mandate
The Government of India, through the Companies Act, 2013, has been gradually implementing stricter regulations regarding the issuance and holding of securities in dematerialized form. The demat process ensures greater transparency, ease of transactions, and security, reducing the risk of fraud or loss associated with physical share certificates.
The compliance requirement under Rule 9B mandates that all private companies (excluding small companies and producer companies) must dematerialize their securities before making any further issuance:

Private companies planning to issue securities to investors.

Companies undertaking share transfers.

Any changes in the capital structure.

With the regular representation with various chambers and professional bodies due to various challenges in execution, the MCA has now granted additional time for compliance up to June 30, 2025 which was earlier Sep 30, 2024.
Key Highlights of the MCA Notification
1. Extension Until June 30, 2025
(a) The deadline for compliance with Rule 9B(2) has been extended from March 31, 2023, to June 30, 2025.
(b) This provides private companies (other than small and producer companies) with more time to complete the dematerialization of securities and obtain ISIN (International Securities Identification Number).
2. Applicability of the Rule
(a) All private companies excluding small companies and producer companies are required to comply.
(b) Companies that intend to issue new shares, transfer shares, or make any alterations in their capital structure must do so only in dematerialized form.
3. Objective of the Amendment

To ease the transition for private companies that have not yet complied.

To ensure greater market transparency and alignment with regulatory frameworks for public companies.

To facilitate smooth investor participation and digital securities transactions.

Impact of This Extension on Private Companies
For Non-Compliant Private Companies:

Companies that were yet to obtain their ISIN or complete dematerialization now have extra time to comply.

They must coordinate with depositories (NSDL/CDSL), registrar & transfer agents (RTAs), and professionals to initiate the dematerialization process.

For Companies Already in Compliance:

Those who have already obtained their ISIN and dematerialized securities will not be affected.

However, they should continue ensuring any new share issuance or transfer occurs only in dematerialized form.

Steps for Private Companies to Comply with the Dematerialization Mandate
1. Obtain ISIN for the Company

Submit necessary documents, including Board resolutions and KYC details.

2. Execute Dematerialization Agreement: Sign an agreement with a Depository Participant (DP) and RTA.
3. Convert Physical Shares into Dematerialized Form:

Existing shareholders must be informed to convert their physical share certificates into electronic format.

Companies must coordinate with shareholders to ensure a seamless transition.

4. Ensure Future Issuances in Demat Mode Only: Any new issue of shares, rights issue, or transfer of securities must be done electronically.
Consequences of Non-Compliance
Failure to comply with the dematerialization requirement can lead to:

Restrictions on issuing and transferring shares.

Regulatory penalties and fines under the Companies Act, 2013.

Challenges in attracting investors and raising funds.

Conclusion
The MCA’s extension of the dematerialization compliance deadline to June 30, 2025, provides much-needed relief to private companies that have yet to complete the process. Companies should utilize this additional time effectively to register for ISIN, sign up with depositories, and fully dematerialize their securities to remain compliant and avoid penalties.
With digitalization playing a critical role in the financial ecosystem, shifting to dematerialized securities ensures greater transparency, efficiency, and security in corporate transactions. If your company has not yet complied, now is the time to act and complete the demat and ISIN process well before the extended deadline. Feel free to contact Compliance Calendar LLP at info@ccoffice.in or 9988424211 if you need help.
MCA Adjudication Order

The Ministry of Corporate Affairs (MCA), through its latest notification dated February 12, 2025, has officially extended the deadline for compliance with the dematerialization (demat) of securities for certain private companies. The new deadline for compliance has been set for June 30, 2025. This amendment has been introduced through the Companies (Prospectus and Allotment of Securities) Amendment Rules, 2025, modifying Rule 9B of the Companies (Prospectus and Allotment of Securities) Rules, 2014.

Dematerialization Mandate

The Government of India, through the Companies Act, 2013, has been gradually implementing stricter regulations regarding the issuance and holding of securities in dematerialized form. The demat process ensures greater transparency, ease of transactions, and security, reducing the risk of fraud or loss associated with physical share certificates.

The compliance requirement under Rule 9B mandates that all private companies (excluding small companies and producer companies) must dematerialize their securities before making any further issuance:

Private companies planning to issue securities to investors.
Companies undertaking share transfers.
Any changes in the capital structure.

Key Highlights of the MCA Notification

1. Extension Until June 30, 2025

(a) The deadline for compliance with Rule 9B(2) has been extended from March 31, 2023, to June 30, 2025.

(b) This provides private companies (other than small and producer companies) with more time to complete the dematerialization of securities and obtain ISIN (International Securities Identification Number).

2. Applicability of the Rule

(a) All private companies excluding small companies and producer companies are required to comply.

(b) Companies that intend to issue new shares, transfer shares, or make any alterations in their capital structure must do so only in dematerialized form.

3. Objective of the Amendment

To ease the transition for private companies that have not yet complied.
To ensure greater market transparency and alignment with regulatory frameworks for public companies.
To facilitate smooth investor participation and digital securities transactions.

Impact of This Extension on Private Companies

For Non-Compliant Private Companies:

Companies that were yet to obtain their ISIN or complete dematerialization now have extra time to comply.
They must coordinate with depositories (NSDL/CDSL), registrar & transfer agents (RTAs), and professionals to initiate the dematerialization process.

For Companies Already in Compliance:

Those who have already obtained their ISIN and dematerialized securities will not be affected.
However, they should continue ensuring any new share issuance or transfer occurs only in dematerialized form.

Steps for Private Companies to Comply with the Dematerialization Mandate

1. Obtain ISIN for the Company

Register with NSDL or CDSL through an RTA (Registrar and Transfer Agent).
Submit necessary documents, including Board resolutions and KYC details.

2. Execute Dematerialization Agreement: Sign an agreement with a Depository Participant (DP) and RTA.

3. Convert Physical Shares into Dematerialized Form:

Existing shareholders must be informed to convert their physical share certificates into electronic format.
Companies must coordinate with shareholders to ensure a seamless transition.

4. Ensure Future Issuances in Demat Mode Only: Any new issue of shares, rights issue, or transfer of securities must be done electronically.

Consequences of Non-Compliance

Failure to comply with the dematerialization requirement can lead to:

Restrictions on issuing and transferring shares.
Regulatory penalties and fines under the Companies Act, 2013.
Challenges in attracting investors and raising funds.

Conclusion

The MCA’s extension of the dematerialization compliance deadline to June 30, 2025, provides much-needed relief to private companies that have yet to complete the process. Companies should utilize this additional time effectively to register for ISIN, sign up with depositories, and fully dematerialize their securities to remain compliant and avoid penalties.

With digitalization playing a critical role in the financial ecosystem, shifting to dematerialized securities ensures greater transparency, efficiency, and security in corporate transactions. If your company has not yet complied, now is the time to act and complete the demat and ISIN process well before the extended deadline. Feel free to contact Compliance Calendar LLP at info@ccoffice.in or 9988424211 if you need help.