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Unlisted companies have to issue new shares in demat form from Oct 2: Govt

The decision also comes at a time when the ministry is clamping down on shell companies that are suspected of being conduits for illicit fund flows

Press Trust of India  |  New Delhi 

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Unlisted have to compulsorily issue new shares in form beginning October 2, the government said Tuesday.

Besides, transfer of shares has to be done only in the or electronic form.

This step has been taken for "further enhancing transparency, investor protection and governance in the corporate sector," the Corporate Affairs Ministry said in a release.

The decision also comes at a time when the ministry is clamping down on shell companies that are suspected of being conduits for illicit fund flows.

From October 2, issue of further shares and transfer of all shares by unlisted shall be in dematerialised form only, the ministry said.

Under the Companies Act, 2013, there are public as well as private companies. Generally, those having more than 200 members are classified as and they have to follow stricter corporate governance norms.

According to the ministry, elimination of risks associated with physical certificates such as loss, theft, mutilation and fraud, would be a key benefit from the decision on having shares in form.

Further, the move would help improve the by increasing transparency and preventing mal-practices such as benami shareholding and back-dated issuance of shares, it said.

"Unlisted public companies are expected to facilitate the dematerialisation of their securities in coordination with depositories and share transfer agents," the release said.

Grievances would be handled by the Investor Education and Protection Fund (IEPF) Authority.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Tue, September 11 2018. 11:20 IST
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