R Karan
INTRODUCTION
Demat or Dematerialisation is the process where the physical share of the company shall be converted to electronic, this process is called Dematerialisation. Converting this physical share into demat is mandated. On October 27, 2023 a Notification issued by Ministry of Corporate Affairs (MCA), that Private companies need demat accounts to hold and manage their securities, particularly in light of the regulatory changes announced. As per Rules of 2014 mandate private companies to issue and enable the dematerialization of their securities, enabling that existing securities are also included in the process.
THE ESSENTIAL STEPS INVOLVED IN THE PROCESS OF OPENING A DEMAT ACCOUNT FOR A PRIVATE COMPANY
Step 1: Select a broker/ Depositary Participant (DP) that offers services to open a Demat account for Private Company
Step 2: Submit all the necessary forms and documents to the Broker/DP
Step 3: The Broker/DP will verify the documents and your application before activating your account
DOCUMENTS REQUIRED FOR A COMPANY IN OPENING DEMAT ACCOUNT:
1. KYC Form – Part 1 and Demat Account opening form – Part 2.
2. Self-Attested copy of PAN Card – Company, Authorised signatories, Two Directors / Whole time Directors and Promoters.
3. Self-Attested copy of Address Proof – Company, Authorised signatories, Two Directors / Whole time Directors and individual promoters.
4. Board Resolution required on the Letter Head of the Company to open the DEMAT account / investment in securities with Broker/DP in the name of the “COMPANY” with Name of Authorized signatory / ies, Designation, Specimen Signature and Mode of Operation (either Singly or Jointly). The same needs to be signed by minimum two Directors/ MD/CS
5. List of Directors duly certified by authorised signatories, List of Directors page from MCA site
6. List of authorised signatories with photographs and specimen signatures duly certified by authorised signatories
7. Copies of Memorandum of Association, Articles of Association and Certificate of Incorporation duly certified by Authorised signatories.
8. Copy of the Audited Financial statements for the last 2 financial years (to be submitted every year).
9. Copy of latest share holding pattern including list of all those holding control, either directly or indirectly, in the company in terms of SEBI takeover Regulations, duly certified by the company secretary/Whole time director/MD (to be submitted every year).
10. Latest photograph of two Directors / whole time Directors to be affix on Account opening form.
11. Latest photograph of all individual Promoters to be affix on Account opening form.
12. In case there are no individual promoters in the company, then declaration signed by Authorised signatories on the company letter head required to that effect.
13. Beneficial Owner Declaration (Annexure I) duly filled & signed.
14. Copy of PAN and Address Proof of share Holders/beneficial Owners (natural persons) holding more than 10% of shareholding/capital/profits in the company. Details to be mentioned in Annexure-I attached. (Not applicable for Limited Companies listed in stock Exchanges in India).
15. FATCA Annexure for Entities duly filled & signed.
16. Form 32 with ROC Acknowledgement required in case if the name of directors is not reflecting in the AOA (MCA site printout (signed by Authorised signatories) confirming name of the Directors can also be accepted if Form 32 is not available)
17. If Aadhar card copy is/are submitted for any individual, then Aadhar consent declaration is/are required.
18. GST Registration number of customer need to be mention in Account opening form page no. 3 in the specified field. (optional)
19. CKYC form containing details of all Beneficiaries/Senior managing officials and all Authorised signatories duly seal and signed by Authorised signatories as per mode of operations.
20. OVD documents (i.e.- Aadhar card, Driving License, Voter ID card, Passport copy, Job card issued by NREGA etc.) containing address of Authorised signatories and Beneficiaries are required.
CONCLUSION
Opening a Demat account is no longer optional for private companies, this account will help you streamline investments and manage the process from one platform while negating risks of losing physical investment certificates simultaneously. By following the proper process and choosing the right depository participant, a private company can smoothly transition into the digital system and avoid future legal or operational hurdles.
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