What do you mean by a small company?
A small company means a private limited company having a paid-up share capital of INR 40,000,000/- or less and turnover not exceeding INR 400,000,000/- in the immediately preceding financial year. However, the following do not fall in the category of a small company even if they meet the above criteria:
- A holding or a subsidiary company
- A company registered under section 8 of the Companies Act
- A corporate body or company governed by any special act
What is Dematerialization of Securities?
The conversion of physical securities into an electronic form maintained by government authorized agencies, i.e. depositories, is called dematerialization of securities or shares.
Key Benefits of Dematerialization of Securities
Dematerialization of securities has several advantages – the primary advantage is it increases convenience and security for the investors. It leads to:
- Enhanced Convenience and Security: Say goodbye to physical paperwork as dematerialization minimizes the risk of physical loss or damage of the share certificate.
- Greater Traceability and Transparency: Real-time tracking of securities through this system provides better visibility and accountability.
- Cost Efficiency and Fraud Reduction: Dematerialization reduces administrative costs while simultaneously decreasing the chances of forgery or fraudulent transactions.
- Eco-Friendly & Paperless: Promotes sustainability through digital-first operations by removing the requirement for physical documentation.
Process of Dematerialization of Securities
Step 1: Obtaining ISIN and identification of Registrar and Transfer Agents (RTA) for availing services.
Step 2: Obtaining Permanent Account Number (PAN) for shareholders, if not available.
Step 3: Identification and finalization of depository participants (DP) to avail the depository related services.
Step 4: Application for converting the physical shares to dematerialized form with the DP.
Step 5: Generating account number and ID to access Demat account.