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Rule 9A of Companies (Prospectus and Allotment of Securities) Rules, 2014 inserted by Companies (Prospectus and Allotment of Securities) Third Amendment Rules, 2018
dated: 10.09.2018

Do’s for the UPC as per Rule 9A

Every UPC shall:

  • Issue the securities (Equity, Preference Shares & Debentures) only in dematerialized form and
  •  facilitate dematerialization of all its existing securities by making necessary application to a depository and shall secure International security Identification Number (ISIN) for each type of security and shall inform all its existing security holders about such facility.
  • Before making any offer for issue of any securities including right issue, bonus issue or buyback of securities, ensure that entire holding of securities of its promoters, directors, key managerial personnel has been dematerialized.
  • Ensure the timely payment of admission as well as annual fees to the Depository, RTA in accordance with the agreement executed between the parties.
  • Maintain all time security deposit with Depository and RTA which shall not be less than two years fees.
  • Make all compliance of all 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 dematerialization of shares of unlisted public companies and matters incidental or related thereto.
  • Not make an offer of any securities or buyback its securities or issue any bonus or right shares till the payments to depositories or registrar to an issue and share transfer agent are made.

Compliance other than the Companies Act

  • The provisions of the Depositories Act 1996, the Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996 and the Securities and Exchange Board of India (Registrars to an Issue and Share Transfer Agents) Regulations, 1993 shall apply mutatis mutandis to dematerialization of securities of unlisted public companies.
  • The audit report provided under regulation 55A of the Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996 shall be submitted by the unlisted public company on a half-yearly basis to the Registrar under whose jurisdiction the registered office of the company is situated.

Do’s for the Security holder of UPC

Every Security holder of UPC:

  • who intends to transfer such securities on or after 2nd October 2018, shall get such securities dematerialized before the transfer.
  • Who subscribes to the securities issued by the way of private placement or bonus shares or rights offer on or after 2nd October 2018 shall ensure that all his existing securities are held in dematerialized form before such subscription.
  • The grievances of security holders, if any under this rule, shall be filed before the Investor Education and Protection Fund Authority and the Authority shall initiate any action against a depository or participant or registrar to an issue and share transfer agent after prior consultation with SEBI.

Audit Report under Regulation 55A of SEBI (DP) Regulations, 1996

Every UPC required to submit Reconciliation of Share Capital Audit Report on a half-yearly basis to the ROC audited by a QUALIFIED CHARTERED ACCOUNTANT or a PRACTICING COMPANY SECRETARY, for the purpose of reconciliation of share capital held in depositories and in physical form with the issued capital. The Reconciliation of Share Capital Audit Report is required to be submitted to the ROC within 30 days from the end of the Half Year.

Procedure for Dematerialisation of Securities

  • Every UPC shall obtain the ISIN number from NSDL or CDSL or Both and shall appoint an RTA.
  • Every UPC shall intimate to its security holders the ISIN No., Name of Depository and Details of RTA as well.
  • The Security holder shall open an Demat Account with Depository Participant of that Depository only from which Company has obtained   ISIN Number.
  • After Opening of Demat Account, the security holder shall fill, sign and submit the DRF Form with DP with the Original Share Certificates.
  • DP shall inform the RTA of the Company about the applications received for dematerialization of securities.
  • The RTA shall confirm the authentication of the Application and validate the signatures and then will report to DP
  • The DP after confirmation will approve the dematerialization of the securities.

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Published by

Hitesh Jhamb
(Cs in Practice)
Category Corporate Law   Report

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