Which companies must dematerialise their shares?

Under Rule 9B, every private limited company that is not a small company must dematerialise its securities, and holding and subsidiary companies must comply regardless of size. Deadlines have already applied for most companies, so pending conversions should be regularised promptly.

What is the small-company exemption?

A private company with paid-up capital of ₹4 crore or less AND turnover below ₹40 crore is a small company and is outside Rule 9B — unless it is a holding or subsidiary company. Cross the thresholds, and the dematerialisation obligation attaches.

PAS-6 is the half-yearly reconciliation of share capital audit report. It reconciles the company's issued capital against the shares held in demat form and is filed with the MCA within sixty days of each half-year end, certified by a practising professional.

An ISIN (International Securities Identification Number) is the unique code allotted to each class of a company's securities by the depository. It is obtained through the RTA when the company admits its securities with NSDL or CDSL, and every demat credit happens against that ISIN.

MCA

Demat of Shares

Convert physical share certificates into dematerialised form as required for eligible companies.

What's covered

Rule 9B of the Companies (Prospectus and Allotment of Securities) Rules requires every private limited company other than a small company to dematerialise its securities — compliance deadlines have already applied (for companies closing their financial year in March, 30 September 2024 was the operative date), so most companies still holding paper certificates are in catch-up mode. We verify the current applicability and any extensions for your company before filing.
The small-company exemption covers private companies with paid-up capital of ₹4 crore or less AND turnover below ₹40 crore — unless the company is a holding or subsidiary company, in which case dematerialisation is mandatory regardless of size.
Dematerialisation runs through a SEBI-registered Registrar and Transfer Agent (RTA) and one of the two depositories — NSDL or CDSL. The company obtains an ISIN for each class of securities, and promoters, directors and key managerial personnel must dematerialise their own holdings first, before the company makes any fresh issue or buy-back.
Non-compliance exposes the company and every officer in default to monetary penalties, with continuing daily fines while the default persists — the figures are fact-specific, so we flag them for CA confirmation rather than quote a single number here. A half-yearly reconciliation in Form PAS-6 must also reach the MCA.

How we work

01
Appoint an RTA and obtain the ISIN
Pass a board resolution, amend the AOA if it does not contemplate dematerialised holdings, execute the tripartite agreement with the RTA and a depository (NSDL or CDSL), and obtain an ISIN for each class of shares.
02
Open demat accounts
Each shareholder opens a demat account with a depository participant; promoters, directors and KMP complete this first so their entire holding is in demat form.
03
Submit the DRF and surrender certificates
Shareholders lodge the Dematerialisation Request Form (DRF) with the physical share certificates; the RTA verifies and confirms, the certificates are cancelled and equivalent shares are credited to the demat account.
04
File PAS-6 half-yearly
The company files Form PAS-6 — the reconciliation of share capital audit report — with the MCA within sixty days of the end of each half-year, certified by a practising professional.

Documents required

Board resolution approving dematerialisation and the depository arrangement
Executed RTA agreement and depository tripartite agreement
ISIN allotment letter for each class of securities
Dematerialisation request form (DRF) per shareholder
Original physical share certificates being surrendered
Demat account details of the shareholders

Applicable laws & forms

Companies Act 2013 — Sec 29 read with the dematerialisation framework for unlisted companies
Companies (Prospectus and Allotment of Securities) Rules, Rule 9B — mandatory dematerialisation for private companies other than small companies, and the PAS-6 reconciliation filing
Depositories Act 1996 — governs NSDL and CDSL, the depository participants and the ISIN system