The Ministry of Corporate Affairs (MCA) has issued the Companies (Prospectus and Allotment of Securities) Amendment Rules, 2025 and has announced an extension to the deadline for mandatory dematerialization of shares for private companies. Originally set for an earlier date, the new deadline for compliance is now 30th June 2025. This extension provides much-needed relief to private companies, giving them additional time to transition to the dematerialized form of holding securities.

The MCA's decision to extend the deadline acknowledges these challenges and allows companies more time to prepare and adapt. This includes setting up the necessary infrastructure, educating shareholders about the process, and completing the conversion of physical certificates to electronic form.

Key Benefits of Dematerialization:

• Enhanced Security: Eliminates the risk of loss, theft, or damage of physical share certificates.
• Increased Liquidity: Facilitates faster and easier transfer of shares.
• Improved Transparency: Provides a clear and auditable record of share ownership.
• Reduced Costs: Lowers the administrative costs associated with handling physical certificates.

The extended deadline provides a valuable opportunity for private companies to ensure a smooth and efficient transition to the dematerialized holding of securities. Companies are advised to utilize this time effectively to comply with the regulations and reap the benefits of dematerialization. Failure to comply by the new deadline may result in penalties.

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