Offer of Securities in Demat Mode

The Offer of securities in demat mode refers to the issuance or sale of securities in electronic or dematerialized form. Dematerialization involves converting physical certificates of securities into electronic form, which can then be held and traded electronically through a depository system.

Regulatory authorities in many countries, including India, have implemented measures to encourage or mandate the dematerialization of securities to modernize financial markets and improve investor protection. In India the Companies Act, 2013 and the Companies (Prospectus and Allotment of Securities) Rules, 2014 contain the provisions regarding public offer of securities in demat form.

REGULATORY FRAMEWORK

Section 29 of the Companies Act, 2013- offer to be in demat mode only w.e.f 15th August 2019

Applicability:

· Public companies making public offer of securities

· Prior to the offer mandatory demat of all shares of each promoters

Warrants w.e.f 28th October 2023

·?Any existing issued warrants to be notified to Registrar in PAS 7

·?Within 6 months the warrants to be converted into shares in demat mode and intimation to warrant holders to be made by placing notice on website and newspaper advertisement in English and vernacular language in form PAS 8.

·?If warrant holders fail to do the same, company shall demat those warrant into shares and transfer to Investors Education and Protection Fund (IEPF).

Rule 9A- Issue of securities in dematerialised?form?by unlisted public companies.

·?Issue of securities can be made only in demat mode

·?Before the issue the entire holding of securities of promoters, directors and KMPs should be dematerialized form.

·?International Security Identification Number (ISIN) to be generated for each class of shares.

·?Every holder of securities of an unlisted company who intends to transfer/subscribe to any securities of the company on or after 2nd October, 2018 shall ensure that all his existing securities are held in dematerialized?form.

·?Company shall comply with the requirements to the depository, registrar to an issue and share transfer agent.

·?Every unlisted public company shall submit Form PAS-6 with the Registrar of Companies within 60 days from the conclusion of each half year duly certified by a CS/CA in practice.

·?Not applicable to an unlisted public company which is a Nidhi, a Government company or a wholly owned subsidiary.

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Offer of Securities in Demat Mode - Akansha Rathi and Associates ( aracs.in )

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