The MCA , on 27th October 2023, has notified two significant amendments vide Companies ( Management and Administration ) Second Amendment Rules, 2023 and Companies ( Prospectus and Allotment of Securities ) Second Amendment Rules, 2023 pertaining to three broad themes of a designated person in reference to Beneficial interest in shares , bearer share warrants under the erstwhile Companies Act, 1956, compulsory dematerialisation of securities for all private companies excluding small companies and Government companies.

This update pertains to the recently introduced demat provisions and the amendment is supported by a specific delegation which is available under Sec 29 of the Companies Act 2013.

A private company, which as on last day of a financial year, ending on or after 31st March, 2023, is not a small company as per audited financial statements for such financial year, shall, within eighteen months of closure of such financial year, comply with the provisions of this rule. (Rule 9B – 2).

Every private company referred to in sub-rule (2) making any offer for issue of any securities or buyback of securities or issue of bonus shares or rights offer, after the date when it is required to comply with this rule, shall ensure that before making such offer, entire holding of securities of its promoters, directors, key managerial personnel has been dematerialised in accordance with the provisions of the Depositories Act, 1996 (22 of 1996) and regulations made thereunder (Rule 9B - 3).

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