MCA extends deadline for private companies to dematerialize their shares.
Last updated on: 15 December 2025
MCA Extends Deadline for Dematerialization of Private Shares
On 12th February 2025, the Ministry of Corporate Affairs (MCA) inserted a new proviso to Rule 9B, extending the deadline for mandatory dematerialization of private company shares to 30th June 2025.
As of the date of this update, no further extension beyond 30 June 2025 has been notified by the MCA.
Impact of Dematerialization Deadline Extension on Private Companies
As a result of this extension, private limited companies may continue to issue or transfer securities in physical form until 30 June 2025, instead of the earlier deadline of 30th September 2024.
However, after this date, issuance or transfer of securities in physical form will not be permitted, and compliance with dematerialization requirements under Rule 9B will become mandatory for applicable private companies.
Background: Rule 9B Under PAS Rules
The original notification was issued on 27th October 2023 by the Ministry of Corporate Affairs through the Companies (Prospectus and Allotment of Securities) Second Amendment Rules, 2023.
Through this amendment, Rule 9B was introduced into the Companies (Prospectus and Allotment of Securities) Rules, 2014 (“PAS Rules”), making dematerialization of shares mandatory for certain categories of private companies.
Applicability of Dematerialization of Shares Under Rule 9B
As per the notification, every private company, other than:
- Government companies, and
- Small companies (having paid-up share capital of ≤ INR 4 crore and turnover of ≤ INR 40 crore as on 31 March 2023),
As per this notification, every private company (other than government companies and small companies i.e. having paid up share capital of less than or equal to Rs. 4 Crores and Turnover of less than or equal to Rs. 40 Crores as on 31st March 2023) need to facilitate its shareholders to dematerialize its existing physical shares by opening DEMAT account in India.
Relevant Provision of Rule 9B
Rule 9B (2)
“A private company, which as on last day of a financial year, ending on or after 31st March 2023, is not a small company as per audited financial statements for such financial year, shall, within eighteen months of closure of such financial year, comply with the provisions of this rule.”
Provisos:
“Provided that a producer company covered under this sub-rule shall, within a period of five years of closure of such financial year, comply with the provision of this sub-rule.”
“Provided further that a private company, other than a Producer company, which is not a small company as on 31st March 2023, may comply with the provision of this sub-rule by 30th June 2025.”
Advantages of Dematerialization of Private Shares
- Holding of Securities in DEMAT It will lead to reduction of physical paperwork.
- Payment of stamp duty at lower rates in DEMAT
- In case of shares in DEMAT form, physical transfer fraud is not possible.
- Once the shares are in DEMAT form, there is no need to issue share certificate in case of fresh issue of capital. Shares can be credited directly in DEMAT form through corporate action.
- Easy Transfer of Securities in DEMAT
How MBG Can Assist in Dematerialization of Private Shares
At MBG, we offer a comprehensive program to assist private companies to open DEMAT Account in India:
Apply for ISIN through NSDL/CDSL
- Assist in collating documents required for obtaining ISIN Number.
- Drafting of Application for obtaining ISIN Number.
- Submission of complete application with NSDL/ CDSL to obtain the ISIN number.
Obtaining PAN of Shareholders
- Collation of necessary documents required for PAN Number.
- Preparation and submission of PAN Application to NSDL/Income Tax Department.
- Liaison with NSDL/Income Tax Department to obtain PAN.
Opening DEMAT Accounts for Shareholders
- Assist in Collation of necessary documents required for obtaining DEMAT Account.
- Assist in Drafting of Application for obtaining DEMAT Account.
- Submission of complete application to obtain the DEMAT Account.
Submission of Half-Yearly Return
- Preparation of e-Form PAS-6 with Registrar of Companies.
- Collate documents and preparation of Form PAS-6.
- File Form PAS-6 with Registrar of Companies.