While answering a question on dematerialisation of shares of unlisted companies during the Question Hour session of the Lok Sabha on 29 December 2017, the Ministry of Corporate Affairs (MCA) had expressed its intention of making it mandatory for unlisted public companies to issue shares in dematerialised form only. The MCA also mentioned that it has carried out consultations with the Securities and Exchange Board of India (SEBI), depositories and other stake holders, to determine the feasibility of this move in a phased manner. The rationale behind the proposed move was to provide greater transparency in shareholding and share transactions, better acceptance of such shares as collateral, and mitigation of disputes and risks associated with securities issued in physical form.
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Dematerialisation mandatory for issue and transfer of securities of unlisted public companies
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