Public offer of securities to be in dematerialised form
📚 Law Minded summary
Certain securities can only exist electronically.
Every company making a public offer must issue those securities in dematerialised form, held in a depository account rather than as paper certificates. Other classes of company can be brought into the same rule by the government.
Physical share certificates are easy to forge, lose and transfer invisibly, which is the problem this addresses.
(1) Notwithstanding anything contained in any other provisions of this Act,—
(a) every company making public offer; and (b) such other class or classes of 1*** companies as may be prescribed, shall issue the securities only in dematerialised form by complying with the provisions of the Depositories Act, 1996 (22 of 1996) and the regulations made thereunder. 2[(1A) In case of such class or classes of unlisted companies as may be prescribed, the securities shall be held or transferred only in demateriali sed form in the manner laid down in the Depositories Act, 1 and the regulations made thereunder.]
(2) Any company, other than a company mentioned in sub-section (1), may convert its securities into dematerialised form or issue its securities in physical form in accordance with the provisions of this Act or in dematerialised form in accordance with the provisions of the Depos itories Act, 1996 (22 of 1996) and the regulations made thereunder.
All sections in Chapter III — Prospectus and Allotment of Securities