How can shareholders of Indian Private companies open a demat account with Zerodha to comply with the MCA Regulation?

As per the Ministry of Corporate Affairs (MCA) circular (WEB), shareholders and investors in Indian unlisted private companies 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. Zerodha will respond within 48 hours. This applies to Indian Individuals, NRIs, Indian body corporates, foreign individuals, and foreign body corporates.
Shareholders who already have a Demat account with Zerodha can directly proceed with the share dematerialisation process.

Key points from the MCA circular (Rule 9B)

• Mandatory dematerialisation for private companies: Companies offering new securities, conducting buybacks, or issuing bonus/rights shares must ensure all shares held by promoters, directors, and key managerial personnel are fully dematerialised.
• Obligations for security holders: Security holders must dematerialise securities before transferring them and ensure all holdings are in dematerialised form before subscribing to new securities.

Who needs to comply with this regulation?

This regulation applies to all companies except Small Companies, which are defined as private companies with:

• Paid-up share capital not exceeding ₹50 lakhs (or higher prescribed amount not exceeding ₹10 crores).
• Turnover not exceeding ₹2 crores (or higher prescribed amount not exceeding ₹100 crores).

Holding companies, subsidiary companies, Section 8 companies, and companies governed by special acts are not considered small companies for this purpose.