Demat – A Word of Caution for Issue/Allotment in Securities - MMJC

In 2018, Rule 9A was added to the Companies (Prospectus and Allotment of Securities) Rules, 2014. This was the first time unlisted public companies were required to facilitate the dematerialization (conversion into electronic form) of their securities. Later, in October 2023, Rule 9B was introduced, making it mandatory for private companies (except small companies) to also facilitate the dematerialization of their securities.

Although the concept of dematerialization is not new, many practical challenges are faced by the companies while undertaking corporate actions post facilitation of dematerialization of securities. An attempt is made through this article, to discuss the practical difficulties faced by the companies during rights issue, private placement, bonus issue of securities and stock split of shares and their possible solutions.

The article is published in the Chartered Secretary Journal of ICSI – April 2025 Edition and is written by Ms. Deepti Jambigi Joshi and Ms. Rutuja Umadikar.

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