Demat of shares of private limited company

Given your facts (private company, foreign nationals as shareholders, turnover > ₹40 crore), you should handle as follows:

1. Obtain ISIN for company’s securities

   • Company needs to procure an International Securities Identification Number (ISIN) for its shares via the depository (NSDL/CDSL) and comply with demat formalities. HLS-SJM Advisors India Private Limited+1

2. Open demat accounts for all existing shareholders (including foreign nationals)

   • For foreign shareholders: verify whether they are NRIs, foreign nationals resident abroad, etc. They likely need to open NRI demat accounts (via DP) or appropriate depository account.

   • They must have PAN (or obtain PAN) to open the account.

   • Transfer existing physical share certificates into dematerialised form via the DP.

3. Company to facilitate dematerialisation

   • The company (or its Registrar & Transfer Agent) must coordinate with DPs, collect demat details of all shareholders, and get physical certificates converted.

   • Update register of members (if still maintained) or rely on depository benefits.

   • Future issues / transfers of shares must be only in demat form.

4. Handle foreign shareholder issues properly

   • For foreign nationals, check whether they are resident or non-resident for Indian regulatory purposes; check applicable FEMA / FDI regulations (though this is separate from demat requirement).

   • Ensure the demat account type, bank account and KYC are consistent with FDI norms (if any).

   • Ensure the company’s share transfer policy/Articles permit transfers to such overseas entities.

5. Ensure deadlines are met

   • Make sure the dematerialisation is completed within the required timeline (18 months from FY end on or after 31 March 2023). Delay may restrict the company’s ability to issue new securities or transfer them.