Demat, explained in plain English
Dematerialisation converts physical share certificates into electronic holdings with a depository. Under the Companies (Prospectus and Allotment of Securities) Rules, 2014, unlisted public companies (Rule 9A) and private companies other than small companies and government companies (Rule 9B, inserted from 27 October 2023) must issue securities only in demat form and facilitate dematerialisation of existing securities.
The company then files Form PAS-6, the reconciliation of share capital audit report, with the Registrar within 60 days from the end of each half-year.
Who must dematerialise under Rule 9B
Every private company other than a small company or a government company must comply with Rule 9B of the Companies (Prospectus and Allotment of Securities) Rules, 2014. Unlisted public companies are covered separately by Rule 9A.
| Company | Rule 9B applies? |
|---|---|
| Private company with paid-up capital above ₹10 crore or turnover above ₹100 crore | Yes |
| Private company that is a holding or subsidiary company, of any size | Yes: a holding or subsidiary company cannot be a small company |
| Private company within both ₹10 crore paid-up and ₹100 crore turnover, not a holding or subsidiary | No: it is a small company |
| Government company | No: specifically excluded |
| Unlisted public company | Covered by Rule 9A instead |
The small company limits were raised to ₹10 crore and ₹100 crore from 1 December 2025 (G.S.R. 880(E)). Some companies that had to comply under the old limits are now small companies. If that is your case, talk to us before you surrender an ISIN or stop filing PAS-6: the right step depends on how many holders have already moved to demat.
Deadlines: what applied and what applies now
Rule 9B took effect on 27 October 2023. A company that was not a small company on the last day of a financial year ending on or after 31 March 2023 was given 18 months from that year end to comply.
- Covered on 31 March 2023: the original deadline of 30 September 2024 was extended to 30 June 2025 by the Companies (Prospectus and Allotment of Securities) Amendment Rules, 2025. That date has passed.
- Stops being a small company later: 18 months from the end of the financial year in which it is not a small company. For example, a company that is not a small company on 31 March 2026 has until 30 September 2027.
If your company missed the deadline, it is still required to comply. Starting now limits the damage, because every new allotment and transfer is blocked until the demat structure is in place.
What changes once Rule 9B applies
Rule 9B changes how every future share transaction works.
- New issues only in demat. Every issue of securities, including rights, bonus and private placement, must be in demat form.
- Before an offer, buy-back, bonus or rights issue, the entire holding of the promoters, directors and key managerial personnel must be dematerialised.
- Transfers. A holder who wants to transfer shares must dematerialise them first. See share transfer. If a founder's vesting transfer is waiting on demat, see founders agreement for how to build the demat position into the agreement.
- Subscribers. Anyone subscribing to securities must hold all their existing securities of the company in demat form.
- Ongoing reporting. The PAS-6 and related provisions of Rule 9A apply to the company, with necessary changes.
Demat: how the work runs, step by step
| Step | What happens | Who acts |
|---|---|---|
| 1. Board resolution | Approve dematerialisation, appoint the RTA, authorise signatories | Board (we draft) |
| 2. RTA appointment | Engagement with a SEBI-registered Registrar and Transfer Agent | Company and RTA |
| 3. Depository agreements | Tripartite agreements between the company, the RTA and NSDL or CDSL (many companies connect with both) | Company, RTA, depository |
| 4. ISIN | ISIN allotted for each class of security | Depository, through the RTA |
| 5. Shareholders move to demat | Each holder opens a demat account and submits physical certificates through their depository participant | Shareholders (we send them instructions) |
| 6. Corporate records | Register of members, MGT-7 and future PAS-3 filings reflect demat holdings | Company (we update) |
| 7. PAS-6 | Reconciliation of share capital audit report, within 60 days from the end of each half-year | Company (we file) |
For a company with a handful of shareholders, the slowest step is usually getting every holder to open a demat account. We give each shareholder a one-page instruction note.
Share your documents by email or WhatsApp. We check every document before anything is signed or filed.
Problems that hold up dematerialisation
These are the issues we see most often. Each one is easier to fix before the RTA starts.
- Lost or damaged share certificates. A duplicate certificate has to be issued under the company's articles before the shares can be converted.
- Name mismatches. The name on the register of members, the share certificate and the shareholder's PAN must match, or the depository participant rejects the request.
- Partly paid shares or unclear allotment history. Missing PAS-3 filings or allotments not reflected in the register must be regularised first.
- Deceased or untraceable shareholders. Transmission has to be completed before those shares can move to demat.
- Plans to raise funds next month. An investor cannot be allotted shares until the setup is done, so start before the term sheet, not after.
Fees
| What | Amount |
|---|---|
| Regikart professional fee: applicability check, board resolutions, RTA and depository coordination, ISIN documentation, shareholder instructions | From ₹9,999 |
| Government fee | No government fee |
| RTA, NSDL or CDSL charges (ISIN, admission, annual charges) | Paid directly to them at their rates; we get their quotes for you. These are private charges, not government fees |
| PAS-6 filing each half-year | MCA normal filing fee by authorised capital (₹200 to ₹600); our fee quoted with the setup |
Professional fees exclude GST at 18%. Government fees, where they apply, are paid at actuals to the department and are shown separately. Fees verified on 22 September 2026.
Documents you will need
- Certificate of incorporation, memorandum and articles
- Latest audited financial statements, for the paid-up capital and turnover test
- Register of members and the full allotment history
- Physical share certificates held by each shareholder
- PAN of the company and of every shareholder
- Board resolution and RTA engagement papers, which we draft
- Details of any holding or subsidiary relationship
Not sure which filing applies to you? Tell us what is changing and we will confirm the forms, deadlines and fee in writing.