MCA Extends Dematerialisation Deadline for Private Companies

The Ministry of Corporate Affairs (MCA) has notified an amendment extending the deadline for private companies to comply with the dematerialisation requirements to June 30, 2025.

In October 2023, the Ministry mandated all private companies, excluding small companies, to facilitate the dematerialisation of existing securities and issue new securities solely in dematerialised form. Here, a small company means a company, other than a public company, whose paid-up share capital does not exceed INR 4 crore, and turnover does not exceed INR 40 crore. The dematerialisation mandate for private companies was established through the introduction of Rule 9B in the Companies (Prospectus and Allotment of Securities) Rules, 2014. As per Sub-rule (2) of Rule 9B, private companies were required to comply with the requirements listed under Rule 9B within 18 months of the closure of the financial year, i.e., by September 30, 2024. 

Further, the October 2023 amendment required private companies to make necessary applications to registered depositories and secure International Security Identification Number (ISIN) for each type of security.

In its letter addressed to the MCA last year, the Institute of Company Secretaries of India (ICSI) highlighted that the depositories, the National Securities Depository Limited (NSDL) and the Central Depository Services Limited (CDSL) were inundated with work as ISIN allotment was taking almost 30-45 days after completion of all documents and payment of fees. This letter, inter alia, sought an extension of the dematerialisation deadline and directions to the depositories to speed up the allotment of numbers.

The new amendment now adds a proviso to Sub-rule (2) of Rule 9B of the 2014 Rules, extending the deadline for private companies to June 30, 2025. This does not apply to producer companies which were earlier allowed, in September last year, to meet the requirements by March 31, 2028.