As per provisions of Rule 9A of the Companies (Prospectus and Allotment of Securities) Rules, 2014, every unlisted public company shall compulsorily issue the securities only in demat mode and facilitate demat of all its existing securities in accordance with provisions of the Depositories Act, 1996 and regulations made there under.
1. For company’s promoters, directors, key managerial personnel(KMP)- The Company shall ensure that all the securities of its promoters, directors and KMPs are dematerialised.
2. For holder of securities of an unlisted public company- The holder shall ensure that all his securities held in the company are dematerialised before he transfers or subscribes to any securities in an unlisted public company
To give effect to this provision, the unlisted public company shall two important things that are:
1. Make an application to a depository to secure International security Identification Number (ISIN) for each type of security to facilitate dematerialisation of all its existing securities, and
2. Appoint a Registrar and Transfer Agent (RTA) to carry out the share registry and transfer of securities of the company.
Further, the company shall also inform all its existing security holders about such facility. For this requirement, the company can either send an email to the shareholders whose email IDs are registered with the Company.
The Rules mention that every unlisted public company shall:
1. Make timely payment of fees (admission as well as annual) to the depository and RTA to an issue in accordance with the agreement executed between the parties (Tripartite Agreement);
2. Maintains security deposit at all times, of not less than two years, fees with the depository and registrar to an issue and share transfer agent in such form as may be agreed between the parties; and
Comply with the regulations or directions or guidelines or circulars, if any, issued by the securities and Exchange Board or Depository from time to time with respect to dematerialisation of shares of unlisted public companies and matters incidental or related thereto.
Every unlisted public company governed by this rule shall also file an e-form 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 (September and March) duly certified by a company secretary in practice or chartered accountant in practice.
Exemption from this Rule:
This rule is not applicable to an unlisted public company which is:-
(a) a Nidhi;
(b) a Government company or
(c) a wholly owned subsidiary.
Draft resolution for admission of securities in the depository system and appointment of RTA is as under:
“RESOLVED that the Company’s <mention the type of securities> be admitted in the Depository System of <name of depository> and that the share certificates of the Company be dematerialised in accordance with the Depositories Act, 1996 and the guidelines issued by SEBI in relation thereto.
FURTHER RESOLVED that <name of Registrar and Transfer Agent> be and is hereby appointed as the Registrar and Share Transfer Agent of the Company.
FURTHER RESOLVED that a Tripartite Agreement be executed between the Company, <RTA> and <Depository>.
FURTHER RESOLVED that the officers of <RTA> be and are hereby severally authorized to take all necessary steps and carry out such formalities, as may be required, under the above tripartite agreement.
FURTHER RESOLVED that the Directors of the Company be and are hereby severally authorised to do all such acts, deeds, matters and things and to execute all agreements, deeds, documents and writings, of whatsoever nature, as may be considered necessary, in connection with the above.
FURTHER RESOLVED that the Common Seal of the Company be affixed to any such agreements and documents, if required, in accordance with its Articles of Association.
FURTHER RESOLVED that in terms of Article __ of the Company’s Articles of Association, the following officers be and are hereby severally authorised to sign the documents to which the Common Seal of the Company is affixed as ‘Authorised Signatory’, along with at least two Directors, of the Company:
Mr. <name> <designation>
Mr. <name> <designation>
Mr. <name> <designation>.”
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