Section 29 of the Companies Act, 2013
Section 29 of the Companies Act, 2013 – Public Offer of Securities to be in Dematerialised Form
📘 Text Summary of Section 29:
Section 29 deals with how companies must issue securities, particularly focusing on dematerialisation (demat) — converting physical shares into electronic form.
✅ Key Provisions of Section 29:
Initial Public Offer (IPO) in Demat Form (29(1)(a)):
Every company making a public offer (like IPO) must issue its securities only in dematerialised form.
Private Companies as per Prescribed Class (29(1)(b)):
Certain private companies, as may be prescribed by the government, are required to issue and hold securities only in dematerialised form.
(This is done to bring transparency and better compliance.)
Compliance with Depositories Act, 1996 (29(2)):
All companies covered under this section must comply with the provisions of the Depositories Act, 1996 and related regulations.
📝 Rule Reference:
The Companies (Prospectus and Allotment of Securities) Rules, 2014, especially Rule 9A, further define which private companies must issue shares in demat form.
For example:
Every unlisted public company.
Private companies (if they fall under certain thresholds like share capital or borrowings) – as prescribed by MCA notifications.
📌 In Simple Terms:
If a company is going public or falls under specific rules, it must issue shares electronically (in demat form) and not in paper certificates.
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