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The Ministry of Corporate Affairs (MCA) vide the Companies (Prospectus and Allotment of Securities) Third Amendment Rules, 2018 dated September 10, 2018 inserted a new Rule 9A which came into effect from October 02, 2018 onwards. As per the said new Rule 9A, every unlisted public company is required to issue its securities only in dematerialised form and take all necessary actions to facilitate dematerialisation of all its existing securities in accordance with the provisions of the Depositories Act, 1996 and regulations made thereunder.
To comply with the above requirements, an unlisted company and holders of the securities of an unlisted public limited company will need to take actions as discussed below:
Actions required by the unlisted public company:
In the event an unlisted public company commits default with regard to above requirements, it shall not be able to make any offer of any securities or buyback of its securities or issue any bonus or right shares till the aforesaid payments are made by it.
Actions required by the holder of securities: The holder of securities of an unlisted public company, before transferring the shares held by them or before subscribing further shares of an unlisted public company whether by way of private placement or bonus shares or rights offer shall ensure that all the securities held by it/him are in a dematerialised form. The aforesaid requirement is applicable to subscription of securities and/or transfer of securities on or after October 02, 2018.