• MCA update for PAS-6, Demat of shares

    Ministry of Corporate Affairs (MCA) vide notification dated 28th November, 2019 has extend the time limit for filing Form PAS-6 without additional fees for the half-year ended on 30.09.2019 will be sixty days from the date of deployment of this form on the website of the Ministry.

    Now question arise that

    ·        Why Form PAS-6 need to file? 

    As we all are aware that Ministry of Corporate Affairs (MCA) vide notification dated 10th September, 2018 has amended the Companies (Prospectus and Allotment of Securities) Rules, 2014 (the "PAS Rules") Issue of securities in dematerialized form by unlisted public companies, to significantly revise these requirements. Subsequently, in 22nd January 2019 & 22nd May 2019 the relevant provisions of the PAS Rules were further amended. 

    Now after reading this you all have arises some more questions in your minds. Let answers one by one.

    ·        What was the Amendment?
    1. Each public company must issue "securities" only in dematerialised form, going forward, and should facilitate the dematerialisation of all its "securities".
    2. A public company can initiate an offer of "securities" (including, by way of bonus, rights, etc.) only after ensuring that securities held by promoters, directors and KMP are dematerialised and provided that there are no outstanding fees payable to necessary functionaries involved in this process (share transfer agent, registrar to issue, depository).
    3. A person intending to subscribe to "securities" of a public company must ensure his existing shareholding in the company is in dematerialised form.
    4. All requirements of regulations framed in relation to depositories – which were typically applicable to listed companies and their securities only– will now apply to unlisted public companies as well.
    5. Each public company must engage with necessary functionaries involved in this process (share transfer agent, registrar to issue, depository), for activities such as inter alia payment of fees, maintenance of security deposit, following instructions, etc.
    6. The Investor Education and Protection Fund Authority shall have authority over grievances of securities holders and shall be able to pass necessary orders against functionaries in consultation with the Securities and Exchange Board of India.
    ·        Whom to apply?
    This amendment is applicable only on unlisted public company

    ·        From When amendment come on effect?
     This amendment is effective from 2 October 2018

    ·        What need to do to comply this?
    all you need to do is
                  I.        appoint one share transfer agent (RTA) who are register with SEBI
                II.        register your shares either with CDSL or NSDL and generate ISIN number
          III.         After that take a reconciliation statement audited by a Practicing Company Secretary (PCS) or a qualified chartered accountant on half yearly basis.
              IV.        Than file e-form PAS-6 within 60days from end of the half year with Registrar of the Company (ROC).

    ·        Is there any Exemption?
    It is however clarified that these stipulations would not apply to
                  I.        a Government company,
                II.        a Nidhi company or
               III.        a company that is a "wholly owned subsidiary". 

    ·          What are the Consequences?

          I.        As there is no penalty/ fine prescribed under rule 9A therefore, as per section 450 of Companies Act, if no penalty/ fine prescribed in any Rule or Section then penalty / fine shall be as per Section 450 i.e.
    The COMPANY and EVERY OFFICER of the company who is in default or such other person shall be punishable with fine which may extend to ten thousand rupees, and where the contravention is continuing one, with a further fine which may extend to one thousand rupees for every day after the first during which the contravention continues.
        II.        Company cannot further allot/transfer its shares.

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