Demat of shares of a Pvt. Co.

Ms. Sneha

Procedure for transfer of shares:

Generally articles contain the details provisions as regards the procedure for transfer of share. Usually following steps shall be followed by a private company to give effect to the transfer of shares:

a)      Transferor should give notice in writing for his/her intention to transfer his/her share to the company.

b)      The company in turn should notify to the members as regards the availability of shares and the price at which such share should be available to them.

c)      Such price is generally determined by the director or the auditors of the company.

d)      The company should also intimate to the members, the time limit with in which they should communicate their option to purchase shares on transfer.

Regards

Ajay

How the Private company can convert their share in dematerialised form ?

Ajay Sir,

The procedure of transfer is clear but here to question is of transfer of DEMATERIALSED shares. such shares need no approval and can be transferred instantly. So how does it wrk? i mean the concept of transfer of shares without intimating the company seems contradictory to nature of pvt companies.

A company may arrange demat connectivity from depository NSDL or CDSL along with share transfer agent (RTA) by entering into a tripartite agreement.

For example if Sneha and Ankur are 2 shareholders of a private company having demat facility and if S wants to transfer her share to A then s have to fill the offline transaction book slip (received by S from her DP) in favour of A and submit the same to her DP. In that case share tran deed and stamp duty would not be required.   

so S can transfer shares to A instantly. The RTA gets notified by DP/depository and in turn company gets the periodic updates. Am i right?

is there no need of a 'sanction' by pvt. company? If not, whts the differnce between transfer of shares of a public co and a pvt. co.? in such cases there is no "restriction on transfer of shares", is it not?

Your doubt and understanding is correct. You have to check the terms and conditions of tripartite agreement and observe the powers of RTA in this regard.

According to me after receiving transfer request from the DP of S the RTA should confirm the same form issuer company or ask for BR for approval of transfer.

I'll talk to my RTA about the same and let you know.

Hello Mr. Ankur

Could you please let us all know if you could get any info from your RTA on this matter.

RTA will confirm from the Company before approving the transfer.

Its only after Company's Board / Committe approval, RTA shall register the transfer in demat mode.

Rgds,

Ashish

what is the procedure of transfer of demat shares of one company to another?

Hello Sneha,

I had asked the same query to my RTA and he replied that even though it is a pvt ltd company, it will not be possible to control the transfer of shares. A shareholder may transfer shares by issue of delivery instruction slip to his DP and transfer will be effected by NSDL by off-market transaction. RTA will come to know about the same only after the transfer has taken place. Even though I am not fully convinced about the answer, do not know any other solution to control . So did you find any solution for the same ?

Thanks in advance

Dipali Shinde

hi sneha 

right now i am also having same query...did u find any answer for this ?

procedure for dematerialisation of private limited company shares

Converting to Demat Shares

In India, a depository is an organisation which holds securities of investors in electronic form at the request of the investors. National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) are currently the two registered depositories with SEBI. 

 However, investors cannot directly trade through depositories and must interact through a depository participant. 

A Depository Participant (DP) is an agent of the depository through which it interfaces with the investor and provides depository services.

Many public financial institutions, commercial banks, stock-brokers, clearing corporations /clearing houses and NBFCs complying to the requirements of SEBI are registered as Depository Participants

To convert shares of a private limited company into demat form, the company and the investors of the company must enter into an agreement with depository participants.

A private limited company can offer demat facility to its shareholders by admitting the securities to the NSDL. To do so, the company must first enter into a contract with an existing Registrar & Transfer Agent (R&T Agent) who is responsible communicating with the NSDL for all share credits and transfers.

Documents Required for Creating Company Demat Account

• Letter of intent cum Master Creation Form (MCF)
• Certified true copies of the audited Balance Sheet for last two years
• Certified true copy of Memorandum of Association & Articles of Association
• Confirmation letter from Registrar and Transfer Agent for common registry
• Net worth certificate from a Chartered Accountant
• Undertaking from company.
• List of Authorized signatory with Board Resolution with specimen signature
• If the company is already admitted in CDSL, the ISIN activation letter from CDSL to be submitted.

Fee for Becoming an Issue

At NSDL, the joining fees for an unlisted companies is Rs.30,000 plus GST. In addition to the joining fee, any issuer of listed securities is required to pay an annual custody fee at the rate of Rs. 8 per folio (ISIN position) in NSDL, subject to the following minimum amount:

Investor Account for Shareholders

In addition to the company becoming an issue, the shareholders of the company must also become an investor under a depository participant to hold their shares of the company in demat form. Shareholders of the company can open a Beneficial Owner (BO) account with a Depository Participant (DP) of any depository.

Procedure for Opening Shareholder Demat Account

• To open a demat account, the shareholder must complete a Beneficial Owner application form with the depository participant along with copies of identity and address proof
• PAN card copy has been mandated at the time of opening Beneficial Owner account for all investors
• Once the application is approved, the investor must sign an agreement with Depository Participant giving details of rights and duties of investor and Depository Participant.
• On opening the account the depository participant will provide the investor schedule of charges, account details and a unique account number, which is also called BO ID (Beneficial Owner Identification number) – which is used for all future transactions.

Charges paid by the investor for converting his/her shares into demat form include:

• One time charges for conversion of shares into demat form
• Annual account maintenance charges
• Transaction fee on sell transactions.

Thanks And Regards

Originally posted by : Ajay Mishra
	Normal 0 false false false EN-US X-NONE X-NONE MicrosoftInternetExplorer4 /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-priority:99; mso-style-qformat:yes; mso-style-parent:""; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin:0in; mso-para-margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:10.0pt; font-family:"Times New Roman","serif";} Ms. Sneha   Procedure for transfer of shares:   Generally articles contain the details provisions as regards the procedure for transfer of share. Usually following steps shall be followed by a private company to give effect to the transfer of shares: a)      Transferor should give notice in writing for his/her intention to transfer his/her share to the company. b)      The company in turn should notify to the members as regards the availability of shares and the price at which such share should be available to them. c)      Such price is generally determined by the director or the auditors of the company. d)      The company should also intimate to the members, the time limit with in which they should communicate their option to purchase shares on transfer.   Regards Ajay

Sir Company will inform transferree ?
How availability of shares determined