A Simple Process for Dematerializing Shares Using the RTA

 The procedure of conversion of physical share certificates in the electronic or dematerialized form is said to be dematerialization so as to handle them in a precise way. The method of Dematerialization could indeed get compared to transferring your money to a bank account rendering a person to maintain the proper records of his/her financial transactions.

Physical share certificates of shareholders can get substituted from Electronic book entries in the case of the dematerialization of shares, in which debit entries indicate the selling of shares while shares purchase would be shown as the credit entries. 

With the service of a Demat Account handled by a Depository, the shares or debt investment made through the investors could be kept in the electronic or dematerialized form. 

From depository participants (DP) and registrar and share transfer agents like SAG RTA, CAMS, etc the depositories can ask for assistance so as to hold the dematerialized shares of investors. Through  NSDL and CDSL depository in India, SAG RTA beneath the Registrar & Transfer Agent Services furnished the facility of the dematerialization.

Upon the urge of the investors, the depository would be an entity that handles all the securities of the investor in electronic form. Central Depository Services Ltd, and National Securities Depository Limited would be the two depositories in India. 

From the depository participants (DPs) the depositories can ask for help so as to function as the intermediary between the issuer company and the actual DP. Through providing the interference between the depository and the investor the DPs help the investors to buy the shares of the companies. DPs support in handling the Demat accounts of the investors precisely.

For the current procedure, a registrar and share transfer agent support the depository participants (DPs) in the security (e.g. bonds, shares, debentures, etc.) dematerialization procedure.

Read Also:- Demat Account – What it is And How To Open A Demat Account Online

To Finish the process of dematerializing the shares of the companies they are needed to take assistance from the registrar and share transfer agents, for example, SAG RTA. the share dematerialization facility for companies and shareholders would be provided by the SAG RTA. 

A Process For Dematerializing Company Shares

• A company is obligated to make the modification in its articles of association if they want to become a share issuer or provide the facility related to Demat. 
• In a general meeting, the company's owner must pass a separate resolution. This will enable the company to issue the shares to the investors in the dematerialized or electronic form.
• Registration with both the Central depositories that is the National Securities Depository Limited (NSDL) and Central Securities Depository Limited (CDSL) should be completed if the private companies from India desire to apply for the dematerialization of the shares. To get registration the private firms must meet the requirements of both depositories. 
• A company will receive International Securities Identification Number (ISIN) for each of its shares If they fulfill the terms and conditions of the Depository. 
• “ISIN” is a unique identification 12-digit alphanumeric number that is linked with all types of securities, i.e., security, shares, Debentures, Bonds, etc. as well as it is offered via the depository to companies proceeding via the process of dematerialization.
• The firms who want to transfer their dematerialized shares into the shareholder’s  Demat account are needed with the Demat connectivity from the depositories like CDSL and NSDL. A tripartite agreement between the company, the depositories, and the transfer agent is mandatory to take on the Demat connectivity.
• In the identical procedure, SAG RTA which is a Registrar and Transfer Agent provides the services related to the company/issuer agent. Services such as dematerialization, initial public offers, rematerialization, and corporate Actions would get furnished by SAG RTA including that it eases the interaction between the investors and the depository participants. 
• The company that wants its physical shares to get Dematerialized must follow certain steps. In India for companies, the rules are being made via two national depositories like NSDL and CDSL.

Read Also:- What is the Procedure To Convert Physical Shares into The Demat Form?

How Can a Dematerialized Firm Share Be Transferred into a Demat Account?

• With a depository participant (DP), the registered shareholder of the company is initially required to open the Demat account and take the account number. 
• After that, a Demat Request Form (DRF) would be obligated to get filled out by the registered shareholder and submit the same including with that the dematerialization to the depository participants of the physical share certificate is needed to be filled. 
• Registered owners must utilize a separate DRF for each ISIN. a separate Demat request would be required to be filed against both the free shares and lock-in shares if the Beneficiary Owner (BO) holds both free and lock-in shares against the identical ISIN.
• The preciseness of the DRF furnished through the registered shareholders shall get verified subsequently through the Depository participant (DP). 
• On the NSDL and CDSL, DP can raise the request as well as similar information could be intimated to the share issuing firms along with the Registrar and Transfer Agent.
• The issuer/ Registrar and Transfer Agent (RTA) shall validate the genuineness of the deposited share certificates to the DP and then the request would be confirmed. 
• DPv eradicates the submitted physical share certificates and generates a Demat Request Number (DRN), after the successful raising of the Dematerialization Request (DR). The same DR shall get sent to the depository via electronic communication in which the DRF along with the share certificate shall get sent to the issuer company/ R&T Agent. 
• An equal number of securities in the Demat account of the Beneficiary owner (BO) would need to be credited by the depository that has been maintained through the NSDL or CDSL, post obtaining the confirmation.
• In the registered shareholder's Demat account, it shall transfer an equal number of securities which has been held with the CDSL and NSDL, after the depository receives the request.

While transferring the Dematerialized shares below mentioned are the roles of the Registrar and Share Transfer Agent

In the concern of completing the transfer of dematerialized shares the Registrar & Share Transfer Agent performs a vital role since they are counted as those who ask the related firms prior to making any approval to the investor's request for the subject of transferring of shares. 

At the time of the dematerialization process for the ease of investors/shareholders and mutual fund houses, Registrar & Transfer Agent, like SAG RTA, CAMS, and Karvy indeed manage the responsibilities of the documentation. R & T Agent does all the background documentation work to support the fund houses.

Through the particular shareholder, Delivery Instruction Slip (DIS) is needed to transfer his shares into the Demat Account of the other shareholder. It is important to carefully handle the Delivery Instruction Slip (DIS) since it works as an investor checkbook.

For transferring or receiving the shares from his or her Demat Account the shareholders that trade on the traditional stock exchanges must tell their DP and R&T agent. 

Before any other buyers account for making an off-market transaction i.e the transfer of shares, the DP is to get informed by the shareholder to make the same transaction succeed and could assist the registrar and transfer agent for that. 

Via the identical process, any additional security (eg., bonds, debentures, etc) could get transferred to the buyers of other accounts through the shareholders by informing the related DP of that. The Demat account number must be cited precisely in DIS.

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Frequently Asked Questions and Answers About E-Form PAS-6 | SAG RTA

MCA (Ministry of Corporate Affairs) initiated a new step that motivates people to obtain the new compliance post every periodic interval that assists to know the things every year. Despite after 6 years of execution of the new companies act 2013 would seem to be newer. Some of the Form PAS-6 concerning information is. 

Below are the mentioned  Frequently Asked Questions (FAQs) on the deployment of E-Form PAS-6 on MCA. 

Basic (Frequently Asked Questions) For E-form PAS-6

Question 1. What Is the Intention to Start Form PAS-6?

Answer:- The major purpose of Form PAS- 6 would be to perform the reconciliation of the different number of securities given (share certificate or Demat credit) match or do not match via furnishing or paid-up capital. 

It ensures that no extra credit for the securities related to the given number of securities is there and that within the stipulated time the Demat process would execute.

Question 2. What Is the Program for Filing Form PAS-6?

Answer:- Under section 29(1) of the company act 2013 despite anything retain in any additional provisions of this Act, (a) each firm making a public offer, and (b) the same sort of other class or classes of companies as might be defined will provide the securities exclusively in dematerialized form through following the provisions of the Depositories Act, 1996 and the rules made as per that.

Under Section 29(1A) of the Companies Act, 2013, for the case of the same class or classes of unlisted companies as might be defined, the securities held or transferred merely in dematerialized form in the way enacted in the Depositories Act, 1996, and the rules formed as per that.

The same is counted under the companies specified in section 9A of the companies (Prospectus and Allotment of Securities) Rules, 2014, i.e., unlisted public companies. Rule 9A (8) of the Companies (Prospectus and Allotment of Securities) Rules 2014 specified that all the unlisted public companies shall provide the Form PAS-6 via the registrar of the companies by paying fees as cited in companies (Registration Offices and Fees) Rules, 2014 in 60 days from the result of each half-year duly certified via the company secretary in executing or chartered accountant in implementation.

Towards half year end dated 30/09/2019 and 30th March every year, the Form would be required to get filed. 

On the date of 15th, July 2020, Form PAS-6 specified on the website of the MCA would be required to get filed within 60 days from the declared date. 

Read Also:- Information about Form PAS-6 and Frequently Asked Questions

Question 3. If the Firm Holds Different Securities Does It Requires to Furnish Form PAS-6?

Answer:- Yes, Rule 9A of the Companies (Prospectus and Allotment of Securities) Rules, 2014 would apply for every class of security and in Form PAS-6 merely one ISIN can be inserted. Hence for distinct types and classes of securities different forms would be required to get filed. Form PAS-6 is an improvised ISIN that could be inserted. Hence the company would be required to file Form PAS-6 for all issued ISIN.

Question 4. Which Act or the Act Made Would Be Examined Even Certifying Form PAS-6 Via the Professional?

Answer:- Certification of Form would not merely be for the data filed in Form PAS-6 but the same is for the companies act 2013, Depositories Act, 1996, and all Regulations related to the dematerialization of Securities. 

Hence the compliances with section 29 of the companies act 2013 rule 9A of the Companies (Prospectus and Allotment of Securities) Rules, 2014, Depositories Act, 1996 including with the laws furnished in it which is a matter to Form PAS-6 and would be examined and reported.

Question 5. For Which Division the Companies Are Required to File Form PAS-6?

Answer:- The companies which are public and not listed along with the subsidiary of the public companies would be obligated to file Form PAS-6. However, the government companies, wholly-owned subsidiaries, and Nidhi firms are unlisted public companies also these are not ought to file Form PAS-6. 

Under Section 2(52) of the companies act, 2013 which is a listed firm discloses that the firm secures any of its securities listed on the recognized stock exchange.

The Companies (Amendment) Bill, 2020, is to be authorised via the Lok Sabha and Rajya Sabha seeks to furnish the provision in the same section in which the same qualifies the central government to prioritize, for the discussion of SEBI some of the firms that have listed or could be listed for the precise class of securities from the recognition that for listed firms. 

The revision in section 2(52) maintains the goods and the central government specified the regulation related to different firms that might be classified as ‘unlisted public companies that are currently not considered to be unlisted public firms. 

Question 6. Is Rule 9a of Firms (Prospectus and Allotment of Securities) Rules, 2014 Subjected to Be Applicable for (A) an Unlisted Public Company but Debt Is Listed, or (B) Private Company However Debt Is Listed or (C) an Unlisted Public Company and Debt Is Unlisted?

Answer:- For unlisted public firms the Rule 9A of the Companies (Prospectus and Allotment of Securities) Rules, 2014 is qualified. As per section 2(52) of the companies act 2013, the listed firms directed that the firm has its securities listed. 

Hence when the debt security is listed these firms (public or private) do not count under Rule 9A of the firms (Prospectus and Allotment of Securities) Rules, 2014. When the debt and equity do not being listed and the firm is a public company then Rule 9A of the firms (Prospectus and Allotment of Securities) Rules, 2014 is appropriate.

The same is compulsory to find out the specified provision (as per them as noted in answer to Q6 above) is requested to be cited in Section 2(52) of the Companies Act, 2013 (under listed company). When such revision in section 2(52) is good and the central government is related to this, the answer might be revised.

Read Also:- All You Need to Know About E-Form PAS-6 Filing FAQs

Question 7. If the Recorded Debt Firms Are Demanded to File Form PAS-6?

Answer:- According to the date of credential, the debt list companies would say to be the listed firms where the procurement of the firms act 2013, therefore the same would not be needed to file Form Form PAS-6 through ROC. Hence the applicant requests for the revision under section 2(52) of the companies act, 2013 (which is explained in Q6 and Q7 above) the very answer might be revised. 

Question 8. Does This Happen That the Debit-Listed Public Firms Furnish, Transfer or Hold the Equity Share in Physical Form?

Answer:- Under Chapter IV of SEBI (LODR) Regulations, 2015, the Debt listed firms are counted. Therefore the Debt listed public firms do not come under Rule 9A of the firms (Prospectus and Allotment of Securities) Rules, 2014, and count under Regulation 40 of SEBI (LODR) Regulations, 2015, on the debt-listed companies (public or private) there is no restriction to furnish the equity shares in physical form.

The applicant to request the revision under section 2(52) of the companies act 2013, (as explained in Ques 6 and Ques 7) there should be obligated to comply with the compliances.

Question 9. When the Company Carried Isin While Some Security Owners Do Not Interchange Their Securities to the Demat Form Is It a Non-Compliance with Section 29 of the Companies Act 2013 or Rule 9a of the organization (Prospectus and Allotment of Securities) Regulations, 2014 and If the Same Is to Be Eligible in Form PAS-6?

Answer:- As per rule 9A(4) of the Companies (Prospectus and Allotment of Securities) Rules, 2014, when the company intended for ISIN and utility open for the Demat to all the security owners, the company needed to comply for the identical purpose. 

There is no time limit towards the revising and existing securities in the Demat unless there would be a securities issue or securities buyback emerging on the basis of the company or on the other security owners requesting for the company for the transfer of the shares.

However, the same companies needed to provide the half-yearly returns and are obligated to circulate that the securities are rendered merely via the members in the physical structure. 

Question 10. When the Debentures or Preference Shares Would Leave for Saving, Is This Indicate That It Could Be Redeemed in the Physical Form? Is Form PAS-6 to Be Filed for the Securities That Have Been Redeemed Completely in the Half Year?

Answer:- No limit would be there on saving the securities in the Demat form and therefore securing could be executed in physical form. When the securities would be taken completely at the end of half year, ISIN should be extinguished by building the application to the depositary. 

For e-Form, PAS-6 does not get filed. However, on the due date of the half year, i.e. September 30 or March 31 when ISIN (International Securities Identification Numbering) would be running till now but preference shares or debentures would be redeemed, Form PAS-6 would be obligated to get filed and the redemption of the preference shares or debentures may inside form via the mode of attachment which the redemption arrived on the place and the ISIN would get destroyed. 

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Information about Form PAS-6 and Frequently Asked Questions

 The PAS-6 form is used to reconcile share capital on a half-yearly basis. The same would be required to get submitted via the unlisted public companies to the Registrar of Companies (ROC). The major purpose of Form PAS-6 would be needed to notify the information and revise the share capital of the companies on half-yearly grounds. An individual who practices Company secretary (CS) or Chartered Accountant (CA) can certify it.

The Ministry of Corporate Affairs (MCA) launched Form PAS-6 via a notification on 10th September 2018. In the very notification, the MCA has inserted Rule 9A (sub-rule 8) to the Companies (Prospectus and Allotment of Securities), Rules, 2014 via the Companies (Prospectus and Allotment of Securities) Third Amendment Rules, 2019. The same shall furnishes for the problem of securities exclusively in dematerialized form through unlisted public companies from 2nd October 2018. 

Read Also:- Know All About MCA Form PAS-6 For Unlisted Public Companies

All about PAS-6 (Reconciliation of Share Capital Audit Report on a Half-Yearly Basis)

• Section 29 of the Companies Act, 2013
• Rule 9A(8) of the Companies (Prospectus and Allotment of Securities) Rules, 2014

Furnishing the reconciliation of the share capital audit report on the half-yearly grounds of the unlisted public companies who had certified from Company Secretary in practice or Chartered Accountant in practice under 60 days from the closure of each half-year. 

Read Also:- Frequently Asked Questions (FAQs) on E-form PAS-6 | SAG RTA 

It is not applicable to the unlisted public company which is-

(a) a Nidhi company

(b) a Government company

(c) a wholly-owned subsidiary Rule 9A of the Companies (Prospectus and Allotment of Securities) Rules, 2014.

Form PAS-6 is obligated to be filed for each type of security, viz., equity and preference. The e- form relates only to share capital (equity and preference) and not with respect to debts (debentures, bonds, etc.)

Below is the Form Pas-6 FAQ's

Question - 1. When a company owns multiple securities, does it require to furnish multiple Form PAS-6?

Answer:  Yes

Question - 2. Do debt-listed companies are required to submit Form PAS-6?

Answer:- Yes 

Question- 3. Some security holders does not convert their securities in DEMAT form while the company has received ISIN does the same would be a non-compliance with Section 29 of the Companies Act, 2013 or Rule 9A of the Companies (Prospectus and Allotment of Securities) Rules, 2014, and whether the same is to be qualified in Form PAS-6?

Answer:- When the company has the purpose of ISIN and available utility for Demat to all security holders under rule 9A(4) of the Companies (Prospectus and Allotment of Securities) Rules, 2014 the company then followed on its end. 

Unless any issue of securities or buyback of securities happens at the Company level or any security holder seeks the Company for the share transfer there is no time duration mentioned to convert the current securities held in Demat. 

But these companies are required to furnish the half-yearly returns and are mandated to specify that the securities would be owned by the members in the physical form. 

Question-4. Is there any requirement to attach any documents/ supporting in PAS-6?

Answer:- No, you are not required to attach anything in the form of PAS-6.

Question-5. What is the penalty for late filing when ISIN generation is processing?

Answer:- Penalty under section 450 of the Companies Act, 2013 shall be applied.

Question-6. UDIN would not be needed to be generated for the certification of Form PAS-6?

Answer:- It does not essential 

Question-7. In Form PAS-6 shareholding pattern of the promoters, directors, and KMP is to be stated. What happens when the promoters are the directors and they hold 10,000 shares? Would 10,000 shares in the promoters class and 10,000 shares in the directors class be specified? Does the same is not said to be the miscalculation?

Answer:- You can cite any one category and attach clarification

Question-8. What shall be the penalty for late filing of Form PAS-6?

Answer:- Rs.10,000 is a one-time penalty and for continuing default Penalty of Rs.1000 per day on the company, the officer in default under section 450 of the Companies Act, 2013 will be applicable as per maximum of Rs.2,00,000 on the Company and Rs.50,000 per officer in default.

Question-9. What is the last date to file PAS-6?

Answer:- 

• The last date to file PAS-6 is 60 days from the conclusion date of each half-year.
• That is Half year ended 31st March: 30th May; and
• Half year ended 30th September: 28th November.

Question-10. Does the promoter, director or KMP would be needed to dematerialize the securities owned via them or the class of securities that the company wants to issue?

Answer:- Prior to issuing any shares all the securities, equity shares, preference shares, or debentures that the promoter owned, director, or KMP would need to be materialized.

Question-11. What is the method to obtain the Demat connectivity through the company?

Answer:-  

• Conduct a board meeting to acknowledge and approve the proposal to take DEMAT connectivity regarding securities with the depositories.
• Appoint a Registrar and Transfer Agent (RTA);
• Post RTA appointment, the company furnishes the application including the related documents with the depository to take DEMAT connectivity:
• The company, depository along with RTA would insert into Tripartite agreement for the securities which would be shown as qualified to be held in dematerialized form;
• Post application verification along with additional documents the depository shall furnsihed DEMAT connectivity to the company and provide ISIN to securities of the company.
• After that, the company shareholders might approach RTA for the dematerialization of their securities.

Question-12. What would be the obtained outcome for the company as well as its shareholders when they do not convert their shares in DEMAT?

Answer:- 

• The company shall not arrive with the below-mentioned things:
• The issue of the new securities with the right issue along with the bonus issue,
• Securities buyback 
• Shareholders are not able to transfer their securities.

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SEBI Authorized and Category 1st RTA Agent For Mutual Fund Investor

The full form of RTA is Registrar and Transfer agents, such firms would be enrolled with the Securities and Exchange Board of India (SEBI). In mutual fund companies, Registrar and Transfer Agent is used to maintain the records. Towards the investors, RTA act as a single window reference. The outcome of that would be, that they could collect all the mutual fund investment-related data via RTA.

Between the investors and mutual fund houses, the registrar and transfer agent (RTA) acts as a mediator. These financial institutions used to hire RTAs towards handling and maintaining the records effectively for the data of the investors. The proper maintenance of the records of the investor data like account balances and transactions is being managed by the RTA agents. 

SAG RTA, 3i Infotech Ltd., CAMS (Computer Age Management Services), and Karvy are counted as prevalent RTA companies in India. They propose Registrar & Transfer Agent Services to financial institutions, mutual fund companies, and investors.

What is the Registrar and Transfer Agent Role for Mutual Fund

RTAs' role, monitors the transactions of the investors in the mutual funds. It consists of various kinds of investor transactions like buying, redeeming, and switching in or out of an investment. Registrar and Share Transfer Agent supports the people to amend the bank mandates and update their personal details. 

RTAs would be qualified with the professional skills towards maintaining the investor along with the AMC information. All the transactions of the investor would get maintained through one company.

Despite the investment might perform with various AMCs. most of the RTAs are having a link with other countries for the same context. Online services are available which the RTA incurred.

The services proposed through the registrar and transfer agents

Towards both the AMCs and investors, the Registrars and transfer agent furnish their services.

For mutual Fund Investors

Investment and transactions: With the help of a portal RTA provides its services. Their system would empower investors to transact with mutual fund companies. You could invest in NFO or transact with an enrolled MF company through an RTA.

 

An R&T agent generates distinct kinds of statements like CAS, portfolio valuation statements, transaction details of a single folio, and gains statements. An investor is enabled to analyze these statements to reevaluate their mutual fund.

The mentioned below service requests can be placed by any investors with the RTA:

• Revocation or stoppage request of an ongoing SIP, STP or SWP
• Modification in bank mandate
• Consolidation of all investor folios under a single folio
• Nomination form
• Updation of records of a minor to major for an individual (change in the guardian, tax details, update investor name)
• Redemption
• CKYC (Central Know Your Customer) forms and a few others are examples of service requests.

For AIF Investors

The below-mentioned services would be provided to AIFs and PMS:


• The below-mentioned services would be provided to AIFs and PMS
• Investor servicing
• Fund accounting
• Value-added services
• KYC
• Pre-launch support
• Document management services
• Knowledge and technology partner

For Mutual Fund Distributors

RTA Services to MF (Mutual Funds) distributors. They could assist the distributors to buy/sell funds on the grounds of the investor. MF distributors are able to submit the online application forms (scanned copies prepared through a scanner installed in the agent’s office). 

Hence their agents would not be required to give a physical presence at the RTA office by 3 PM. Before that, 3 PM was the cut-off time to submit the application for investment. An applicant is entitled to the same day’s net asset value or NAV only when their application was submitted prior to the cut-off time. 

Agents indeed generate the sales report performed through them in the mentioned duration. The information could be drawn for any frequency as required monthly, quarterly, or yearly. On the website of the RTA, a distributor can mention his needs to obtain the reports. 

A recent service would be started by RTA Know-Your-Customer (KYC) forms for investors. Likewise, they indeed process know your distributor forms for the distributors. Some RTAs like CAMS service insurance companies also.

For Mutual Fund Companies

RTAs secured links across the country which would assist the fund houses to lessen costs. They would set up offices all over India and directed that the fund houses not be required to open branches at these locations. 

RTA is used to deliver electronic communication like account statements, newsletters, or other important communication from the AMC. They furnished essential information to investors and distributors. 

Registrar & Transfer Agent levies the fund houses for their services. This cost would ultimately be handed on to the investor as a portion of the yearly cost imposed via MF houses. The cost for equity funds would be about 10 basis points (bps). One bps would be equal to one-hundredth of a percentage point. It is near 5-7 bps for debt funds and about 3-4 bps for liquid funds.

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