dematerialise of shares

Do you wish to dematerialise the shares of your company

dematerialise of shares

Dematerialise the shares

1. While going for dematerialisation of shares one has to keep in mind the following :

(a) The Depositories Act, 1996.

(b) SEBI (Depositories and Participants) Regulations, 1996.

(c) SEBI (Custodain of Securities) Regulations, 1996.

2. Determine the number and value of securities to be dematerialise.

3. The SEBI ( Issue of Capital and Disclosure Requirements) Regulations, 2009. It has made it mandatory for a company to make public or rights issue or an option to be given to subscribers/shareholders/investors.

4. Select a depository and a participant who are holding certificate of registration from SEBI.

5. Enter into an agreement with a depository, if your company wants to exercise the option to hold its securities, in dematerialised form, to enable the investor to dematerialise the securities.

6. Adopt the form of such agreement specified in the bye-laws of the depository.

7. Where your company has appointed a Registrar to the Issue or Share Transfer Agent, enter into a tripartite agreement with the Registrar to the Issue or the Share Transfer Agent. The depository in respect of the securities to be declared by the depository as eligible to be held in dematerialised form.

8. Adopt the form of the above agreement also given in the bye-laws of the depository.

9. Convene a Board Meeting by not less than 7 days notice to every director of the company at his address registered with the company.

10. Every officer of the company is punishable with a fine up to Rs.25,000.

11. The investor who wants to keep his securities in dematerialised form should also enter into an agreement with the depository through the participant who acts as an agent of the depository and open an account with the depository participant.

12. Adopt the form of the agreement given in the bye-laws of the depository.

13. Before doing so ensure that the depository. The participant has entered into agreement with each other for their respective services.

14. Ensure that the beneficial owner has entered into an agreement with a participant informs the participant of the details of the certificates of securities which are to be dematerialised and surrenders those certificates of the participant.

15. Note that where the beneficial owner has appointed a custodian of securities, like Stock Holding Corporation of India Limited then the certificates of securities. It should be surrendered to the participant through the custodian of securities.

16. On receipt of information as above the participant on its turn will forward the details received from the beneficial owners to the depository.

17. Keep in mind that the participant is required to maintain records of the beneficial owners.

18. Obtain from the participant details of the securities surrendered by beneficial owners along with the certificates of those securities.

19. On receipt of the certificates of securities from the participant, immediately mutilate and cancel them and substitute in your company’s records being register of members etc., ‘

20. Send a certificate as to receipt, mutilation and cancellation of certificates of securities to the depository.

21. Note that the securities held by a depository will be dematerialised. It will be in a fungible form.

22. Further note that nothing contained in section 89 of the 2013 act will apply to a depository in respect of securities held by it on behalf of the beneficial owners.

23. A depository will be considered to be the registered owner for the reasons of executing transfer of ownership of securities on behalf of a beneficial owner.

24. Also note that the depository as a registered owner will not have any voting rights in respect of securities held by it.

25. Keep in mind that the beneficial owners will be entitled to all the rights and benefits.

26. A certificate from your company as mentioned in Item No.19 above.

27. Maintain a record of certificate of securities of your company which have been dematerialised.

28. Reconcile the records of dematerialised securities and issued by your company on a daily basis will all the securities .

29. Start continuous electronic means of communication with which your company has entered into an agreement.

30. Obtain information from the depository about the transfer of securities in the name of beneficial owners specified by the bye-laws of the depository.

31. Make available to the depository copies of the related records in respect of securities held by such depository.

32. Note that SEBI issues lists of scrips from time to time for compulsory dematerialised trading which form part of Sen sex and Nifty indices.

33. Further note that the choice of scrips is decided on the basis of five parameters being, trading volume of the scrips, institutional holdings, extent of dematerialisation, incidence of bad delivery problems and the distribution of registrars.

34. Even the Registrar or the Share Transfer Agent of your company may act as a depository participant for your companies shares.

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