Decrypting Demat: Legal Innovations And Regulatory Shifts For Private Companies In The Post-June 2025 Era
- IJLLR Journal
- 41 minutes ago
- 2 min read
Mahak Jain, UPES
ABSTRACT
India has witnessed a transformation in the securities market, a shift from the physical securities to electronic ones after 30th June 2025, and the shift is known as dematerialization. In the process of dematerialization, the physical securities are converted into electronic form and held in a demat account. The purpose of this change is to improve efficiency, security of transactions, and transparency. It has also streamlined the trading of securities by removing the physical formalities required for buying and selling securities and by reducing several corporate risks, thefts, and frauds. Although the demat form seems convenient and risk-free, it is also prone to certain risks, like cybersecurity threats, and can create digital discrepancies. The research paper will explore the dematerialization process for a private company post- June 2025. It will focus on the key factors, like the depositary participant, the company’s registrar, and depositors, that play a major role in the process of dematerialization. As the research is a take on the private companies, it will include the provisions of the Companies Act, 2013; the Companies (Prospectus and Allotment of Securities) Rules, 2014; the SEBI (Depositories and Participants) Regulations, 2018; and regulations issued by SEBI. This paper aims to explore the legal, regulatory, and practical implications of the June 2025 dematerialization mandate for private companies in India. It examines the legislative framework underlying dematerialization, the procedural roadmap for implementation, relevant jurisprudence and regulatory guidance, and the potential benefits and hurdles of this digital shift. Additionally, it will critically analyse the benefits and challenges for converting the physical securities into electronic after June 2025 and anticipate the impact and implications on private companies. It will also highlight the mandatory compliance for dematerialization for public companies and how it shaped the corporate efficiency, and after the Ministry of Corporate Affairs (MCA) issued a notification, the same compulsion for the private companies, excluding the small companies from that mandate. The research concludes with process, legal transitions, and jurisprudence development addressing dematerialization for private companies.
Keywords: Dematerialization, Depository participant, Private Companies, DEMAT account.
