Demat of Securities - Mandatory in Unlisted Public Companies

Ministry of Corporate Affairs (MCA) vide notification dated 10 September, 2018 has amended the Companies (Prospectus and Allotment of Securities) Rules, 2014. The amendment is effective from Tuesday 2 October, 2018.  The highlights of the same are as follows:

1.  Unlisted Public Companies are mandatorily required to offer Demat facilities. 
2.  Every holder of securities of Unlisted Public Companies who want to sell their securities will have to Demat their securities before selling 
3. Anyone who wants to acquire securities of Unlisted Public Companies is required to have Demat account
4.   Any further issue of securities by Unlisted Public Companies needs to be in Demat. 
5.  If unlisted public companies wants to issue any securities or buyback securities or issue bonus shares or make rights offer entire shareholding of Promoters, Directors and KMP needs to be in Demat
6. Unlisted Public Companies are required to submit certificate under regulation 55A of the securities and Exchange Board of India (Depositories and participants) Regulations, 1996 to ROC on a half-yearly basis 
7. All the unlisted public companies are required to pay the timely fees and maintain necessary security deposit with the depository and registrar to an issue and share transfer agent in accordance with the agreement executed between the parties 
8. All the unlisted public companies are required to comply with the regulations/directions issued by SEBI w.r.t demat and matters related and incidental thereto
9. In case of default under point 7 mentioned above, unlisted public companies shall not offer issue any securities or buyback securities or issue bonus shares or make rights offer till the payment are made  
10. The grievances, if any, of security holders of unlisted public companies shall be filed before the Investor Education and protection Fund (IEPF) Authority