Introduction of Pas-6 in Filing: Mandating the Convesrion of Shares from Physical to Demat
As per MCA Circular dated September 10, 2018, MCA amended the Companies (Prospectus and Allotment of Securities) Rules, 2014 by inserting Section 9A: Issue of securities in dematerialised form by unlisted public companies after Rule 9.
This rule shall be applicable to:
1. Public Unlisted Company
2. Deemed Public Company
This rule shall not apply to Private Limited Companies AND Unlisted public company which is:-
(a) a Nidhi Company;
(b) a Government company or
(c) a wholly owned subsidiary
What the Rule 9A Says: Main three points of Rule 9A are:
1. Issue and Demat of existing securities: These companies in which rule are apply, it is mandatory to issue their securities in dematerialized form on or after October 02, 2018 and facilitate the dematerialisation of its existing securities in accordance with Depositories Act, 1996
2. Holding of Such Person has been Dematerialised: Before making any offer of securities or buyback or bonus issue or right issue, Entire holding of Following class of person (Promoters, Directors and KMP) has been dematerialized
3. Every security holders of these companies must ensure that
(i) before transferring his shares on or after October 2,2018 must convert its securities into dematerialised form,
(ii) If the security holder intends to subscribe his shares must ensure that all his existing securities are held in dematerialised form.
Which E Form is to be filed with ROC and due date for the such E Form
Every unlisted public company shall submit Form PAS-6 to the Registrar with such fee as provided in Companies (Registration Offices and Fees) Rules, 2014 within sixty days from the conclusion of each half year duly certified by a company secretary in practice or chartered accountant in practice.
Purpose of Form PAS-6:
PAS-6 (Reconciliation of Share Capital Audit Report a half-yearly basis) which is used for reconciliation of the share capital audit report on the half –year basis.
Due Date of Filing of e-form PAS-6
All information shall be furnished within 60 days from the end of each half year (30th September/31st March of every year) for each ISIN separately.
Normally, E-form PAS-6 is to be filed within 60 days from the end of the half year. But as per MCA Circular No. 16/2019 dated: 28.11.2019– it is stated that the time limit for filing Form PAS-6 without additional fees for the half-year ended on 30.09.2019 will be sixty days from the date of deployment of this form on the website of the Ministry.
Hence, as the e-form PAS-6 is deployed on MCA portal on 15th of July, 2020, therefore it should be filed within 60 days from 15th July, 2020 i.e., 13th of September, 2020 for both the half year ending on 30th September, 2020 and 31st March, 2020.
Main Point under Consideration is:
1. The e-form PAS-6 shall be filed for each ISIN of securities. Hence, the question arises whether it is mandatory for public companies to apply for ISIN? And the answer is Yes, since, As per MCA notification dated 10th September, 2018 due date for the same was October 02, 2018. And now the PAS-6 makes it mandatory for public companies to apply for ISIN and to put such ISIN in the specified E Form.
2. And most importantly, The PAS-6 cannot be filed with ROC until and unless the company does not put up the ISIN No. So, now the companies upon which this rule is applicable are required to contact the RTAs and to get ISIN and to get the shareholders of public unlisted company aware about getting their shares dematerialized.
3. Whether Private Company is required to convert its shares into DEMAT
As on date the provision of conversion of share into DEMAT is not applicable on a private limited company, however if private company is subsidiary of public company then such private company shall be considered as the deemed public company and therefore it is also required to follow the process of conversion of shares into DEMAT.
4. Penal provisions for not complying with Rule 9A i.e. by not converting securities into DEMAT and obtaining ISIN?
As per Section 450, the company and every officer of the company who is in default or such other person shall be punishable with fine which may extend to ten thousand rupees, and where the contravention is continuing one, with a further fine which may extend to one thousand rupees for every day after the first during which the contravention continues.
And, As there is no penalty prescribed under rule 9A for non-compliance, therefore section 450 (punishment where no specific penalty or punishment is provided) will be applicable.
Conclusion: So from above it is very clear that PAS-6 require the companies to put up the ISIN and hence, it is now the responsibility of the Public Unlisted Companies to Convert its securities into “DEMAT” by obtaining the ISIN and to submit the Form PAS-6 to the Registrar from the conclusion of each half year duly and to intimate and to bring to the notice of the depositories any difference observed in its issued capital and the capital held in dematerialized form.
Disclaimer: The contents of this article are for information purposes only and does not constitute an advice or a legal opinion and are personal views of the author. It is based upon relevant law and/or facts available at that point of time and prepared with due accuracy & reliability. Readers are requested to check and refer relevant provisions of statute, latest judicial pronouncements, circulars, clarifications etc before acting on the basis of the above write up. The possibility of other views on the subject matter cannot be ruled out.
Regads: CS Mohit Saluja, Jalandhar, [email protected], 99145-58709