Foreign nationals and foreign corporate entities who invest in unlisted companies in India through foreign direct investment (FDI) are required to comply with the Ministry of Corporate Affairs (MCA) regulations regarding the dematerialisation of shares. According to the MCA circular, these investors must dematerialise their shares and hold them in a demat account.
To open a demat account with Zerodha to dematerialise and hold these shares, please create a ticket or send an email to [email protected]. Zerodha will respond within 48 hours.
The documents required to open an account as a foreign national or a foreign corporate entity are as follows:
- Foreign body corporation: CDSL (PDF) and NSDL (PDF)
- Foreign national individual: CDSL (PDF) and NSDL (PDF)
Key points from the MCA circular (Rule 9B, points 3 and 4):
Mandatory dematerialisation for private companies offering securities: Any private company that makes an offer to issue new securities, conduct a buyback, or issue bonus shares or rights after the compliance date of this rule must ensure that all shares held by its promoters, directors, and key managerial personnel are fully dematerialised in line with the Depositories Act, 1996.
Obligations for security holders in private companies: Any holder of securities in a private company:
(a) who intends to transfer their securities on or after the compliance date must first have those securities dematerialised.
(b) who subscribes to new securities in the company, whether through private placement, bonus shares, or rights offers, on or after the compliance date must ensure that all their holdings are in dematerialised form before subscribing.