Now, dematerialization of securities is mandatory for unlisted public companies. In simplified words we can say that unlisted public companies are required to issue securities in demat form. Along with this, they are also required to facilitate the dematerialization of existing shares.
From 2019, as per the mandate of market regulator Securities and Exchange Board of India (SEBI), only shares in the electronic format can be sold or transferred at the stock markets. It does not mean you cannot hold shares in the physical form, just that you cannot sell or transfer them.
The process of converting the physical shares of a company into an electronic form is commonly known as dematerialization (Demat). You will have to open a demat account with a Depository Participant (DP) before raising a request for conversion of your physical shares.
Private company can allot shares without receiving minimum subscription.
1 No unlisted company shall make a public issue of equity share or any security convertible at later date into equity share, if there are any outstanding financial instruments or any other right which would entitle the existing promoters or shareholders any option to receive equity share capital after the initial …
Fill out request form:
Fill out a dematerialisation request form once your demat account is opened. Take your physical shares with you and surrender them to your DP while filling out the form. Do not forget to write ‘Surrendered for dematerialisation’ on every share certificate.
Physical shares are share certificates. Actually, they do not exist any longer. We do not deal in physical shares any longer. But in the old days, we used to deal with physical shares. They used to be paper certificates.
A private limited company can offer demat facility to its shareholders by admitting the securities to the NSDL. To do so, the company must first enter into a contract with an existing Registrar & Transfer Agent (R&T Agent) who is responsible communicating with the NSDL for all share credits and transfers.
In case of private company either it can issue shares to its existing shareholders by way of rights issue or by way of giving them bonus shares or it can issue securities through private placements. PRIVATE PLACEMENT – Part II of Chapter III, Section 42 of the Act.
Share dilution is when a company issues additional stock, reducing the ownership proportion of a current shareholder. Shares can be diluted through a conversion by holders of optionable securities, secondary offerings to raise additional capital, or offering new shares in exchange for acquisitions or services.
The most common and extensively used type of share in a private limited is equity shares. As per the Companies Act of 2013, equity shares are any shares other than preference shares. All equity is treated equally. So if you own equity in a company, your shares come with all the voting and other rights inherent in them.