ISSUE OF SHARES UNDER DEMAT MODE - URGENT

[RKS]

Dear members,

I have some queries relating to shares issued under demat mode by an
unlisted company :

1. Can an unlisted company issue shares under demat mode?

2. I guess they have to enter into tripartiate agreement with
depository and DP, if yes when they enter into agreement whether they
enter for dematerialisation of whole of paid up capital or authorised
share capital ?

3. When those companies who has entered into such agreement when they
further allot shares ? what would be the procedure to dematerialise
those shares?

4. Whether distinctive nos needs to be mentioned in the resolution
alloting those shares ? Please provide copy of such resolution.

Regards,
Raja Karthik S.
Licentiate ICSI

[Mahesh Joshi]

Dear Raja

1. Can an unlisted company issue shares under demat mode?

> Yes

2. I guess they have to enter into tripartiate agreement with
depository and DP, if yes when they enter into agreement whether they
enter for dematerialisation of whole of paid up capital or authorised
share capital ?

> Yes tripartite agreements is required between Company, Depository (NSDL and/or CDSL) and Registrar & Transfer Agent (RTA); and not DP. The depositories will allot a uniuqe number ISIN to the scrip of the company. [Not sure though I think that establishing connectivity with both depositories should not be compulsory for an unlisted co as it is for listed cos] (Members may pls correct me). 

3. When those companies who has entered into such agreement when they
further allot shares ? what would be the procedure to dematerialise
those shares?

> In such case company can directly allot shares in demat mode to the allottees who are having demat accounts. The company is required to intimate depository and RTA for credit of shares to respective demat accounts of allottees.

4. Whether distinctive nos needs to be mentioned in the resolution
alloting those shares ? Please provide copy of such resolution.

> Yes distinctive number is required to be mentioned because even though shares will be allotted in demat mode, a certificate is prepared in the name of depository and stamp duty is paid on it. Resolution can be as same as under physical mode but additionally you can mention demat account numbers of allottees in front of their names. Also one para is required to be added saying that "CS is authorized to sign and submit Corporate Action form to depository to intimate allotment of shares."

Regards,

CS Mahesh

2009/4/6 RKS <rkart...@gmail.com>

[raja karthik]

Dear Mahesh,

 

Thank you very much Mr. Mahesh for the quick and detailed response.

 

Just one confirmation so share certificates are to be issued in the name of Depository (ie. NSDL / CDSL)

 

Thanks once again.

 

Regards,

Raja Karthik S.

Licentiate ICSI

[Mahesh Joshi]

infact once you submit details of allotment to your RTA, they will print certificates in the name of depositories with corresponding number of shares allotted and then you can pay stamp duty and keep in your records.

Regards
Mahesh

2009/4/6 raja karthik <rkart...@gmail.com>

[raja karthik]

Thank you very much