Demat of shares of a pvt. company

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sruti gupta (Querist)
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28 March 2012 Is it necessary to amend the AOA of a pvt.Co. in order to demat its shares and if yes than please help me the clause which is to be entered in the AOA

Ajay Mishra

Ajay Mishra (Expert)
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28 March 2012 Hi

Yes it is necessary to have a Depository section Clause in AOA.

sruti gupta

sruti gupta (Querist)
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28 March 2012 can u write the applicable sections in this regards....please or from where can i refer this

Ajay Mishra

Ajay Mishra (Expert)
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28 March 2012 Hi

Following clause will be in AOA:

"DEMATERIALISATION OF SECURITIES"

12(A) (i) Notwithstanding any thing to the contrary contained in these Articles the Company shall be entitled to dematerlalize its securities and to offer securities in a dematerialised form pursuant to the Depositories Act.
ii) When any securities of the Company are held or dealt in dematerialised form.
(a) Every person holding securities of the Company through allotment or otherwise shall have the option to receive and hold the same in the dematerialised form with a depository.
(b) All securities held by a depository shall be dematerialised and shall be in fungible form. Nothing contained in Section 153, 153A, 153B, 187B and 187C of the Act, shall apply to a depository in respect of the securities held by it on behalf of the beneficial owner.
(c) Every person holding securities of the Company with a depository, being the beneficial owner thereof, may at any time opt out of the depository in the manner provided under the provisions of the Depositories Act, 1996, and the rules. It any, prescribed thereunder and on fulfilment of the conditions prescribed by the Company from time to time, the Company shall issue the relevant security certificate to the beneficial owner thereof.

12(B) (i) The Company shall make available to the depository, copies of the relevant records in respect of securities held by such depository for the beneficial owners thereof.
(ii) When a holder or an allottee of the securities opts to hold the same with a depository, the Company shall Intimate such depository the details of his holding or allotment of securities and thereupon the depository shall enter in its record the names of the holders/allottees as the beneficial owners of such securities.

12(C) The register and index of Beneficial Owners of securities maintained by a depository under section 11 of the Depositories Act, shall be deemed to be the Register and index of Members or of Holders of Debenture or other securities of the Company.

12(D) (i) Transfer of securities held in a depository will be governed by the provisions of depositories Act, 1996.
(ii) Every depository shall furnish to the Company information about the transfer of securities, the name of beneficial owners at such intervals and in such manner as may be specified under the provisions of Depositories Act, 1996.
(iii) Section 108 of the Act shall not apply to transfer of securities effected by the transferor or and the transferee both of whom are entered as beneficial owners in the records of a depository.

12(E) (i) A depository shall be deemed to be the registered owner for the purposes of effecting the transfer of ownership of securities on behalf of the beneficial owners and shall not have any voting rights or any other rights in respect of the securities held by it.
(ii) Every person holding securities of the Company and whose name is entered as the beneficial owner in the records of the depository shall be deemed to be a member of the Company. The beneficial owner of securities shall be entitled to all the rights and benefits and be subject to all the liabilities in respect of his securities which are held by a depository.

12(F) Nothing contained in the Act or these Articles regarding the necessity of having numbers for securities issued by the Company shall apply to Securities.

12(G) Notwithstanding anything contained in these articles or the act, the provisions of Depositories Act, 1996, relating to dematerialization of securities, (including any modification or re-enactment

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