(LiveMint)
In a bid to crackdown on opaque paper transactions, the ministry of corporate affairs (MCA) is considering asking public unlisted companies to convert their shares into dematerialized or demat form, said three people with direct knowledge of the matter.
The move could potentially impact around 68,000 companies. According to MCA, as of July, there are 1.14 million active companies limited by shares; of these, 75,193 are public companies. Within that category, 67,884 are unlisted companies.
“About 80% of shares issued by these public unlisted companies are in physical form,” said an official from a depository firm, one of the three cited earlier, declining to be named. This move is “akin to ‘lifting the veil’ as physical shares by their very nature tend to be opaque,” said Samir Paranjape, a partner at consultancy firm, Grant Thornton India LLP.
An unlisted public company is one which has more than 50 shareholders, a higher minimum capital requirement of Rs5 lakh and needs to comply with statutory requirements such as holding meeting with shareholders and capping director remuneration.
