Class of companies need to issue shares in dematerialized form compulsorily:

  1. Every Listed Company, and
  2. Every unlisted Public company shall-
  • Issue the securities in dematerialized form; and
  • Facilitate dematerialization of all the existing securities.

Ministry of Corporate Affairs issued a gazette notification dated September 10, 2018 regarding compulsory dematerialization of shares of all Unlisted Public limited Companies. The said notification available at the link: http://www.mca.gov.in/Ministry/pdf/CompaniesProspectus3amdRule_10092018.pdf


  1. Every unlisted public company shall issue fresh securities in dematerialized form only.
  2. Every unlisted public company shall facilitate dematerialization to its existing security holders and shall secure ISIN (International Security Identification Number) for each type of security and shall inform to all its existing security holders.
  3. Every unlisted public company making any offer for issue of any securities or buyback of securities or issue of bonus shares or rights offer shall ensure that before making such offer, entire holding of securities of its promoters, directors, key managerial personnel has been dematerialized in accordance with provisions of the Depositories Act 1996 and regulations made there under.
  4. Every holder of securities of an unlisted public company:
  • who intends to transfer such securities on or after 2nd October, 2018, shall get such securities dematerialised before the transfer,
  • who subscribes to any securities of an unlisted public company (whether by way of private placement or bonus shares or rights offer) on or after 2nd october, 2018 shall ensure that all his existing securities are herd in dematerialized form before such subscription.
  1. The audit report provided under regulation 55A of SEBI (Depositories and participants) Regulations, 1996 shall be submitted by the unlisted public company on a half-yearly basis to the Registrar.
  2. The grievances, if any, of security holders of unlisted public companies under this rule shall be filed before the IEPF.
  3. The IEPF Authority shall initiate any action against a depository or participant or registrar to an issue and RTA after prior consultation with SEBI.




  1. Dematerialized securities are securities that are not on paper and a certificate to that effect does not exist. They exist in the form of entries in the book of depositories.
  2. Dematerialization is the process of converting physical securities in the demat form.
  3. Depositories: It can refer to an organization, bank, or institution that holds securities and assists in the trading of securities. Presently there are two depositories in INDIA:
  • National Securities Depository Limited (NSDL),
  • Central Depository Service (India) Limited (CDSL).
  1. ISIN: An ISIN stands for international securities identification number and is a 12 digit code that assists in identifying securities such as stocks, equities, notes, bonds, debt, funds and more.
  2. Depository Participant (DP) is the agent of the Depository and is the medium through which the shares are held in the electronic form. They are also the representatives of the investor, providing the link between the investor and the company through the Depository.
  3. Registrar and Share Transfer Agent: Registrar or transfer agents are the trusts or institutions that register and maintain detailed records of the transactions of investors for the convenience of mutual fund houses.
  4. Benifical Owner means a person whose name is recorded as such with a depository.


  1. Beneficiary Owner (BO) has to open a demat account with a Depository participant (DP) and obtain an account number.
  2. The client (registered owner) will submit a request to the DP in the Dematerialisation Request Form (DRF) for dematerialisation, along with the certificates of securities to be dematerialised. Before submission, the client has to deface the certificates by writing “SURRENDERED FOR DEMATERIALISATION“.
  3. The DP will verify that the form is duly filled in and the number of certificates, number of securities and the security type (equity, debenture etc.) are as given in the DRF. If the form and security count is in order, the DP will issue an acknowledgement slip duly signed and stamped, to the client.
  4. The DP will scrutinize the form and the certificates. This scrutiny involves the following:
  • Verification of Client’s signature on the dematerialisation request with the specimen signature (the signature on the account opening form). If the signature differs, the DP should ensure the identity of the client.
  • Compare the names on DRF and certificates with the client account.
  • Paid up status
  • ISIN (International Securities Identification Number)
  • Lock – in status
  • Distinctive numbers
  1. In case the securities are not in order they are returned to the client and acknowledgment is obtained. The DP will reject the request and return the DRF and certificates in case:
  • A single DRF is used to dematerialise securities of more than one company.
  • The certificates are mutilated, or they are defaced in such a way that the material information is not readable. It may advise the client to send the certificates to the Issuer/ R&T agent and get new securities issued in lieu thereof.
  • Part of the certificates pertaining to a single DRF is partly paid-up; the DP will reject the request and return the DRF along with the certificates. The DP may advise the client to send separate requests for the fully paid-up and partly paid-up securities.
  • Part of the certificates pertaining to a single DRF is locked-in, the DP will reject the request and return the DRF along with the certificates to the client. The DP may advise the client to send a separate request for the locked-in certificates. Also, certificates locked-in for different reasons should not be submitted together with a single DRF
  1. In case the securities are in order, the details of the request as mentioned in the form are entered in the DPM (software provided by NSDL to the DP) and a Dematerialisation Request Number (DRN) will be generated by the system.
  2. The DRN so generated is entered in the space provided for the purpose in the dematerialisation request form.
  3. DP would setup a demat request on the CDSL or NSDL system.
  4. The DP will then despatch the certificates along with the request form and a covering letter to the Issuer/ R&T agent.
  5. The Issuer/ R&T agent confirms acceptance of the request for dematerialisation in his system DPM (SHR) and the same will be forwarded to the DM, if the request is found in order.
  6. The DM will electronically authorise the creation of appropriate credit balances in the client’s account.
  7. The DPM will credit the client’s account automatically.
  8. The DP must inform the client of the changes in the client’s account following the confirmation of the request.
  9. The issuer/ R&T may reject dematerialisation request in some cases. The issuer or its R&T Agent will send an objection memo to the DP, with or without DRF and security certificates depending upon the reason for rejection. The DP/Investor has to remove reasons for objection within 15 days of receiving the objection memo. If the DP fails to remove the objections within 15 days, the issuer or its R&T Agent may reject the request and return DRF and accompanying certificates to the DP. The DP, if the client so requires, may generate a new dematerialisation request and send the securities again to the issuer or its R&T Agent. No fresh request can be generated for the same securities until the issuer or its R&T Agent has rejected the earlier request and informed NSDL and the DP about it.


Transfer of shares by an individual in dematerialized form:

  1. A shareholder who wants to dematerialise his shares needs to open a demat account with Depository Participant (DP), and surrender his physical shares.
  2. If a shareholder who wants to transfer shares to the demat account of another can transfer by issuing appropriate instructions to the concerned depository participant through Delivery Instruction Slip (DIS) which will be issued by the DP. The delivery instruction slip is a book similar to a cheque book and an investor is supposed to handle it with the same care as a cheque book.
  3. If an investor wants to transfer securities through the stock exchange, he/she has to instruct the DP to transfer shares from his demat account to the brokers’ pool account.
  4. In case he wants to transfer shares to any other buyer`s demat account, i.e., an off market transaction, he will have to instruct his DP to transfer to the concerned buyer’s demat account. Similarly, securities can be transferred to the buyers demat account by the instruction of the seller (transferor) to his concerned DP. The seller is supposed mention investor`s demat account number in the DIS.
  5. It is important to note that RTA has to confirm from the company before approving the transfer. Company approval is necessary and then only RTA shall register a transfer in the demat mode.



  1. Application for admission as Issuer of Eligible Securities:
  • Part I – Issuer Details
  • Part II – Security Details
  1. Networth certificate from a Chartered Accountant as per audited annual report for the last financial year.
  2. Certified true copy of Board Resolution mentioning name of signatories who are authorized by Board to execute documents and list of Authorised Signatories along with specimen signature.
  3. Confirmation letter from Registrar & Transfer Agent (R&T Agent).
  4. Certified true copies of Memorandum & Articles of Association along with Certificate of Incorporation.
  5. Certified true copy of Audited annual report for the last financial year.
  6. If company has issued equity shares after latest balance sheet in that case company has to provide us certified true copy of PAS-3.
  7. If there is any variation in face value of shares or reduction in capital after the last balance sheet date in that case company has to provide certified true copy of SH-7.


Circular No.: NSDL/CIR/II/26/2018  Dated  September 25, 2018

  1. Joining fees:
  • Issuer of unlisted securities shall pay a joining fee of Rs.15,000 plus taxes.
  • : Issuer of listed securities shall pay a joining fee of Rs. 20,000 plus taxes at the applicable rate at the time of joining NSDL, for the purpose of making its shares available for dematerialization.
  1. Annual Custody fees: An Issuer shall pay an annual custody fee at the rate of Rs. 11 per folio (ISIN position) in NSDL, subject to a minimum amount as mentioned below, plus taxes as applicable
Nominal Value of Securities admitted (Rs.) Amount (Rs.)
Upto 2.5  crore (applicable only for unlisted company) 5,000
Upto 5 crore 9,000
Above 5 crore and upto 10 crore 22,500
Above 10 crore and upto 20 crore 45,000
Above 20 crore 75,000


NOTE: The fee will be charged every year on a financial year basis and shall be payable by April 30 of that financial year.