Quick Summary
MCA notified the Companies (Prospectus and Allotment of Securities) Second Amendment Rules, 2023 on October 27, 2023. These rules are aimed at increasing transparency and efficiency in the securities market, and to reduce the risk of fraud.
The key changes introduced by the new rules are
- Dematerialization of share warrants for public companies: Public companies that issued share warrants before the Companies Act, 2013, and have not yet converted them into shares must dematerialize them within six months of the commencement of the new rules.
- Mandatory dematerialization for private companies: Private companies, excluding small companies, must now issue securities only in dematerialized form.
In addition, the new rules also make some minor changes to the prospectus and allotment rules, such as clarifying the requirements for disclosing information about related party transactions and the procedure for allotting shares to qualified institutional buyers.
Official copy of the notification has been enclosed below
FAQ :
The rules were notified on October 27, 2023.
The rules aim to increase transparency and efficiency in the securities market and reduce the risk of fraud.
Public companies that issued share warrants before the Companies Act, 2013, and haven't converted them to shares must dematerialise them within six months of the rules commencing.
Yes, private companies, excluding small companies, must now issue securities only in dematerialised form.
Yes, minor changes include clarifying requirements for disclosing related party transactions and the procedure for allotting shares to qualified institutional buyers.
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