The Ministry of Corporate Affairs (“Ministry”) has notified the Companies (Prospectus and Allotment of Securities) Second Amendment Rules, 2023 (“Rules, 2023”) to further amend the Companies (Prospectus and Allotment of Securities) Rules, 2014. The Rules, 2023 addresses the changes impacting public and private companies.

Key changes:

1. For Public Company-

i. Every public company which has issued share warrants prior to commencement of the Rules, 2023 and has not converted into shares is required to –

a. Inform the Registrar about the details of such share warrants in Form PAS-7 within a period of three months of the commencement of Rules, 2023 and

b. Inform the bearers of the share warrants to surrender such warrants to the company and get the shares dematerialised in their account within a period of six months of the commencement of the Rules, 2023.

In light of the above, the company must place a notice for the bearers of share warrants in Form PAS-8 on the website of the company, if any and must also publish the same in a newspaper in the vernacular language which is in circulation in the district and in English language in an English newspaper, widely circulated in the State in which the registered office of the company is situated.

ii. In the event where any bearer of share warrant does not surrender the share warrants within the said period referred, the company must convert such share warrants into dematerialised form and transfer the same to the Investor Education and Protection Fund.

2. For Private Company

i. The Rules, 2023 also inserts provision for every private company other than a small company which is required to –

a. issue the securities only in dematerialized form; and

b. facilitate dematerialisation of all its securities, in accordance with provisions of the Depositories Act, 1996 and its regulations.

ii. A private company which is not a small company as per audited financial statements for such financial year ending after 31st March 2023, must comply with the provisions of the Rules 2023 within September 30, 2024.

iii. Every private company referred here must ensure that entire holding of securities of its promoters, directors, key managerial personnel has been dematerialised before making any offer for issue of any securities or buyback of securities or issue of bonus shares or rights offer. The dematerialisation must be in accordance with the provisions of the Depositories Act, 1996 and its regulations.

iv. Holders of the securities of the private company who intends to transfer or subscribe securities must get such securities dematerialised.

Source: Ministry Of Corporate Affairs

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