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Demat of Shares

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    Demat of Shares

    Demat or Dematerialisation is the process by which a shareholder can get physical share certificates of a company converted into electronic balances. Converting physical shares into demat shares is often mandated by investors while investing in the shares of a company and is advisable for companies looking to raise equity funds. In this article, we look at the process to demat shares of a private limited company.

    In India, a depository is an organisation which holds securities of investors in electronic form at the request of the investors. National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) are currently the two registered depositories with SEBI. However, investors cannot directly trade through depositories and must interact through a depository participant. A Depository Participant (DP) is an agent of the depository through which it interfaces with the investor and provides depository services. Many public financial institutions, commercial banks, stock-brokers, clearing corporations /clearing houses and NBFCs complying to the requirements of SEBI are registered as Depository Participants. Both the NSDL and CDSL has hundreds of depository participants through whom investors can deal. To convert shares of a private limited company into demat form, the company and the investors of the company must enter into an agreement with depository participants.

    Documents Required for Creating Company Demat Account

    • Letter of intent cum Master Creation Form (MCF)
    • Certified true copies of the audited Balance Sheet for last two years
    • Certified true copy of Memorandum of Association & Articles of Association
    • Confirmation letter from Registrar and Transfer Agent for common registry
    • Net worth certificate from a Chartered Accountant
    • Undertaking from company.
    • List of Authorised signatory with Board Resolution with specimen signature
    • If the company is already admitted in CDSL, the ISIN activation letter from CDSL to be submitted.

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