Dematerialization of Shares of Private Companies Under Rule 9B

Dematerialization of Shares of Private Companies Under Rule 9B. In a recent development, through a notification dated October 27, 2023, the MCA introduced Rule 9B in the PAS Rules called Companies (Prospectus and Allotment of Securities) Rules, 2014, providing for the mandatory dematerialization of securities of certain private companies. Before this amendment, it was obligatory for all unlisted public companies to exclusively hold and issue securities in dematerialized form. Private companies are now required to complete the dematerialization of shares or issue new shares in dematerialized form within 18 months from the conclusion of the financial year ending on March 31, 2023. Consequently, the compliance deadline is set for September 30, 2024, and in case of the conclusion of the financial year ending on 31.03.2024, the compliance deadline would be September 30, 2025
Applicability - All Private Limited Companies (Other than small)

Holding company

Subsidiary companies including Foreign Subsidiary Companies

Private Limited Company having Paid-up capital > 4 Crores or Turnover > 40 Crore

Section 8 Company (Limited by shares)

Stage I: Generation of ISIN for the Applicable Company with NSDL/CDSL
1. Engage with a Registrar and Transfer Agent (RTA)
Selecting the RTA based on experience and brief about the company. Engagement through an agreement detailing responsibilities, deliverables, and fees.
2. Required Documentation: CCL will prepare for you

Master Creation Form (MCF)

Soft & hard copies of security details in the prescribed format (Equity).

Board Resolution for admission of securities with CDSL mentioning the details about authorized signatory(ies) and appointment of RTA, if any.

Certified copy of the Certificate of Incorporation and Certificate of Incorporation under change of name of company, if applicable.

Undertaking on the letterhead of the company duly stamped and signed by the authorized signatory (For Private Companies).

Declaration for freezing/unfreezing of securities (applicable in case of Private Limited Company).

Certified Copies of the Memorandum and Articles of Association.

Certified true copy of the Annual Report for the last financial year.

Net worth Certificate from a Practicing Chartered Accountant/Practicing Company Secretary.

Tri-partite (for franking and e-stamping/on stamp paper) - kindly execute the same on non-judicial stamp paper or franking value of Rs.600/- duly applied DSC on the first and last page.

Certified true copy of GST Registration Certificate, PAN Card of company, TAN.

3. Submit Application to RTA
Complete the ISIN application form provided by the RTA. Attach necessary supporting documents. Include a certified true copy of the board resolution.
4. RTA Verification and Submission to Depository like CDSL
Liaison with RTA to verify the application and supporting documents. RTA will submit the verified documents to the depository (CDSL)/NSDL.
5. Liaison with CDSL
Follow up with the CDSL/NSDL after RTA submits the ISIN request to CDSL. Maintain regular follow-ups with the RTA to track the application status.
6. Approval and ISIN Generation
CDSL/NSDL reviews the application and conducts due diligence. Upon approval, CDSL/NSDL generates and allocates the ISIN. RTA communicates the allocated ISIN to the company.
7. Dissemination of ISIN Information
Update the company’s records with the new ISIN. Inform relevant stakeholders about the new ISIN.
Stage II: Procedure of Conversion of Physical Shares to Demat

Surrender physical shares.

File a Demat Request Form (DRF).

Generate a Demat Request Number (DRN) and follow up with the Depository Participant (DP).

Ensure the credit of shares in the RTA of the company.

Now, before proceeding with ISIN creation and subsequently dematerialization of shareholders' shares, it is mandatory for the applicant to obtain a PAN. Therefore, it is important to compile the necessary documents and share them with the Depository Participant (DP) for account opening and process ensures compliance with depository requirements and facilitates the seamless transition of physical shares to electronic format. For foreign body corporates and individuals, specific documentation, including a certificate of registration, passport copies, and other identification proofs, must be duly attested by the appropriate authorities to complete the PAN application.  In the case of foreign body corporate or individual demat, it is mandatory to obtain a PAN before opening a demat account. Below is the checklist for PAN application for foreign body corporates and foreign individuals:
PAN Card for Foreign Body Corporate:
1. Copy of Certificate of Registration:
Issued in the country where the Company is located, duly attested by 'Apostille' or by the Indian High Commission or Indian Embassy located in the country where the Company is located.
2. Form 18/INC 22 is required if there is an address change.
3. Email ID and Mobile Number of the company.
4. Delivery Address:

Original Power of Attorney duly notarized/attested by Apostille or by the Indian High Commission or Indian Embassy located in the country where the Company is located.

Such PoA should specifically mention that the 'Indian Tax Consultant (...Name...)' is authorized to accept notices from the Income Tax Department on behalf of the Company.

If the Company wants the PAN card to be delivered to its foreign address, no other document is required.

If the Company wants the PAN card to be delivered in India, the address of the Company's tax consultant in India can be given in the application as 'Representative Assessee'. In this case:

PAN Card for Foreign Individuals:
ID Proof (any one of the following, duly attested by Apostille or by the Indian Embassy):

Valid Passport Copy:

Apostilled by the embassy.

Latest Bank Statement:

Not more than 2 months old and apostilled by the embassy.

Copy of Person of Indian Origin (PIO) Card:

Issued by the Indian government.

National/Citizenship/Taxpayer ID:

Duly attested by Apostille or by the Indian Embassy/High Commission or Consulate in the country where the applicant is located, or authorized officials of overseas branches of scheduled banks registered in India.

Address Proof (any one of the following, duly attested by Apostille or by the Indian Embassy):

Valid Passport Copy:

Apostilled by the embassy.

Latest Bank Statement:

Not more than 2 months old and apostilled by the embassy.

Copy of Person of Indian Origin (PIO) Card:

Issued by the Indian government.

Registration Certificate:

Issued by the Foreigners Registration Office showing Indian address (applicable for foreign citizens based in India).

Information Required:

Email ID and Mobile Number:

Contact details of the applicant.

Office Address:

Address details of the applicant.

Applicant & Father/Mother First, Middle & Last Name:

Complete name details as required.

Details of Representative Assessee:

In case the PAN is to be delivered in India.

By going through the complete procedures of demat of shares of private companies and creation ofISIN and thereafter dematerializing their shares, ensuring that securities are held in compliance with the mandatory regulations under the Companies Act 2013 and it not only streamlines the management of shares but also aligns the company's practices with current legal requirements for further Issue of Share Capital and transfer of Shares. Compliance Calendar LLP is here to assist you throughout this process, ensuring a smooth and efficient transition from obtaining a PAN to ISIN creation and the dematerialization of shares.
Download the details if you wish to proceed with ISIN Creation and Dematerialization services from Compliance Calendar LLP.

In a recent development, through a notification dated October 27, 2023, the MCA introduced Rule 9B in the PAS Rules called Companies (Prospectus and Allotment of Securities) Rules, 2014, providing for the mandatory dematerialization of securities of certain private companies. Before this amendment, it was obligatory for all unlisted public companies to exclusively hold and issue securities in dematerialized form. Private companies are now required to complete the dematerialization of shares or issue new shares in dematerialized form within 18 months from the conclusion of the financial year ending on March 31, 2023. Consequently, the compliance deadline is set for September 30, 2024, and in case of the conclusion of the financial year ending on 31.03.2024, the compliance deadline would be September 30, 2025

Applicability - All Private Limited Companies (Other than small)

Holding company
Subsidiary companies including Foreign Subsidiary Companies
Private Limited Company having Paid-up capital > 4 Crores or Turnover > 40 Crore
Section 8 Company (Limited by shares)

Stage I: Generation of ISIN for the Applicable Company with NSDL/CDSL

1. Engage with a Registrar and Transfer Agent (RTA)

Selecting the RTA based on experience and brief about the company. Engagement through an agreement detailing responsibilities, deliverables, and fees.

2. Required Documentation: CCL will prepare for you

Master Creation Form (MCF)
Soft & hard copies of security details in the prescribed format (Equity).
Board Resolution for admission of securities with CDSL mentioning the details about authorized signatory(ies) and appointment of RTA, if any.
Certified copy of the Certificate of Incorporation and Certificate of Incorporation under change of name of company, if applicable.
Undertaking on the letterhead of the company duly stamped and signed by the authorized signatory (For Private Companies).
Declaration for freezing/unfreezing of securities (applicable in case of Private Limited Company).
Certified Copies of the Memorandum and Articles of Association.
Certified true copy of the Annual Report for the last financial year.
Net worth Certificate from a Practicing Chartered Accountant/Practicing Company Secretary.
Tri-partite (for franking and e-stamping/on stamp paper) - kindly execute the same on non-judicial stamp paper or franking value of Rs.600/- duly applied DSC on the first and last page.
Certified true copy of GST Registration Certificate, PAN Card of company, TAN.

3. Submit Application to RTA

Complete the ISIN application form provided by the RTA. Attach necessary supporting documents. Include a certified true copy of the board resolution.

4. RTA Verification and Submission to Depository like CDSL

Liaison with RTA to verify the application and supporting documents. RTA will submit the verified documents to the depository (CDSL)/NSDL.

5. Liaison with CDSL

Follow up with the CDSL/NSDL after RTA submits the ISIN request to CDSL. Maintain regular follow-ups with the RTA to track the application status.

6. Approval and ISIN Generation

CDSL/NSDL reviews the application and conducts due diligence. Upon approval, CDSL/NSDL generates and allocates the ISIN. RTA communicates the allocated ISIN to the company.

7. Dissemination of ISIN Information

Update the company’s records with the new ISIN. Inform relevant stakeholders about the new ISIN.

Stage II: Procedure of Conversion of Physical Shares to Demat

Surrender physical shares.
File a Demat Request Form (DRF).
Generate a Demat Request Number (DRN) and follow up with the Depository Participant (DP).
Ensure the credit of shares in the RTA of the company.

Now, before proceeding with ISIN creation and subsequently dematerialization of shareholders' shares, it is mandatory for the applicant to obtain a PAN. Therefore, it is important to compile the necessary documents and share them with the Depository Participant (DP) for account opening and process ensures compliance with depository requirements and facilitates the seamless transition of physical shares to electronic format. For foreign body corporates and individuals, specific documentation, including a certificate of registration, passport copies, and other identification proofs, must be duly attested by the appropriate authorities to complete the PAN application. In the case of foreign body corporate or individual demat, it is mandatory to obtain a PAN before opening a demat account. Below is the checklist for PAN application for foreign body corporates and foreign individuals:

PAN Card for Foreign Body Corporate:

1. Copy of Certificate of Registration:

Issued in the country where the Company is located, duly attested by 'Apostille' or by the Indian High Commission or Indian Embassy located in the country where the Company is located.

2. Form 18/INC 22 is required if there is an address change.

3. Email ID and Mobile Number of the company.

4. Delivery Address:

Original Power of Attorney duly notarized/attested by Apostille or by the Indian High Commission or Indian Embassy located in the country where the Company is located.
Such PoA should specifically mention that the 'Indian Tax Consultant (...Name...)' is authorized to accept notices from the Income Tax Department on behalf of the Company.
If the Company wants the PAN card to be delivered to its foreign address, no other document is required.
If the Company wants the PAN card to be delivered in India, the address of the Company's tax consultant in India can be given in the application as 'Representative Assessee'. In this case:

PAN Card for Foreign Individuals:

ID Proof (any one of the following, duly attested by Apostille or by the Indian Embassy):

Valid Passport Copy:

Apostilled by the embassy.

Latest Bank Statement:

Not more than 2 months old and apostilled by the embassy.

Copy of Person of Indian Origin (PIO) Card:

Issued by the Indian government.

National/Citizenship/Taxpayer ID:

Duly attested by Apostille or by the Indian Embassy/High Commission or Consulate in the country where the applicant is located, or authorized officials of overseas branches of scheduled banks registered in India.

Address Proof (any one of the following, duly attested by Apostille or by the Indian Embassy):