MCA notifies issue and transfer of all shares in dematerialized form

MCA notifies issue and transfer of all shares in dematerialized form only by all unlisted Public companies

The PIB has issued the press release on the Issue and transfer of all shares in dematerialized form. Only by all unlisted Public Companies.

The Ministry of Corporate Affairs (MCA) has notified that with effect from 2 October 2018, issue of further shares and transfer of all shares by unlisted public companies shall be in dematerialized form only. The MCA has taken this step as a measure for further enhancing transparency, investor protection and governance in the corporate sector. The rules in this regard have been amended accordingly.

Download the press release by clicking the below image:

According to the MCA, the major benefits of dematerialization of securities which will now be
available to the unlisted Public companies include:-

i. Elimination of risks associated with physical certificates such as loss, theft, mutilation, fraud etc.

ii. Improving the corporate governance system by increasing transparency and preventing malpractices such as benami shareholding, back the dated issuance of shares, etc.

iii. Exemption from payment of stamp duty on transfer.

iv. Ease in the transfer, pledge etc. of securities.

Unlisted Public Companies are expected to facilitate the dematerialization of their securities in coordination with Depositories and Share Transfer Agents. Any grievances arising out of such Dematerialization of securities will be handled by the IEPF Authority. The measure is expected to significantly enhance the Corporate Governance standards in the country.