Good news for companies in India as MCA has extended the deadline for mandatory dematerialisation of securities for private companies to June 30, 2025. Thus, companies now have an additional time to comply with demate compliance requirements.
What is Demat Compliance in India for companies?
Demat compliance involves converting physical share certificates into electronic records, facilitating efficient and secure management of securities. All the companies except small companies have to do demat Compliance mandatorily.
What is a Small Company in India?
According to Section 2(85) of the Companies Act, 2013, a small company refers to a private entity that meets specific financial criteria. As of the latest amendment effective from September 15, 2022, a small company has:
- A paid-up share capital not exceeding ₹4 crore.
- A turnover not exceeding ₹40 crore in the immediately preceding financial year.
These thresholds help identify companies that operate on a smaller scale and qualify for certain regulatory relaxations.
Which companies are excluded from Small Company Classification and have to do Dematerialization Compliance?
The following companies are excluded from the small company classification and must comply with dematerialization by June 30, 2025.
- Public companies.
- Holding or subsidiary companies.
- Companies registered under Section 8 (pertaining to non-profit objectives).
- Any special Act governs companies or corporate bodies.
Therefore, Private Limited Companies crossing the financial limits and above-mentioned companies even if they do not meet the financial criteria, they are not considered small companies under the Act. All those companies that do not fall under the small company category must adhere to the demat compliance requirements by the stipulated deadline.
Conclusion
In conclusion, the extension of the dematerialisation deadline to June 30, 2025 gives companies in India more time to meet demat standards. Companies should proactively examine their situation and take the required actions to guarantee compliance with the current requirements. If you have any other doubts regarding mandatory demat requirements for private companies, feel free to contact our experts
Also, require any other guidance with respect to Company Formation please feel free to contact our business advisors at 8881-069-069.
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