The Ministry of Corporate Affairs in October 2023 had mandated private companies and their shareholders to dematerialize their shareholdings by 30 September 2024.
As a part of this circular, small private companies were
excluded. Small companies mean private companies whose (i) paid-up capital does
not exceed INR 4 Crore and (ii) turnover during the last
financial year does not exceed INR 40 Crore. If the small company ceases to
satisfy any of the above conditions in a particular FY, it will have a window
of 18 months from the end of the FY to comply with the mandate of dematerialization.
Accordingly, steps are required to be undertaken to identify
a depository and undertake the process of dematerialization. This would include
opening dematerialization accounts for shareholders and depositories require
shareholders to have a PAN to open such accounts.
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