MCA Extends Deadline for Mandatory Dematerialisation Compliance to June 30, 2025

The Ministry of Corporate Affairs (MCA) has issued the Companies (Prospectus and Allotment of Securities) Amendment Rules, 2025, extending the deadline for mandatory dematerialisation compliance for certain private companies. This move is aimed at facilitating a smoother transition for companies that were facing challenges in meeting the previous deadline. This extension has been granted through Notification dated February 12, 2025, specifically for extending the last date for compliance.

Key Highlights of the Update

• Applicability: Private companies that are not classified as small companies as of the financial year ending on or after March 31, 2023, must ensure their securities are in dematerialised form.

• Revised Deadline: The earlier deadline of September 30, 2024, has now been extended to June 30, 2025.

• Compliance Requirements:

  • All existing securities must be converted into dematerialised form before the new deadline.

  • Any future issuance, transfers, or corporate actions (such as bonus or rights issues) must be conducted in dematerialised form only.

  • Companies must facilitate the dematerialisation process by coordinating with a registered depository (NSDL or CDSL) and obtaining an International Securities Identification Number (ISIN).

The extension provides much-needed relief, particularly for businesses that were struggling with logistical and procedural aspects of dematerialisation. However, it is advised that companies start the process well in advance to avoid last-minute regulatory non-compliance. Ensuring compliance with dematerialisation rules enhances corporate governance and increases transparency in ownership records.

Companies are encouraged to take proactive steps towards dematerialisation compliance to align with regulatory expectations and avoid penalties