Filing of Reconciliation of Share Capital Audit Report for Unlisted Public Companies

Ministry of Corporate Affairs (MCA) vide its Notification No. G.S.R. 3768(E) dated 22nd May, 2019, amended Companies (Prospectus and Allotment of Securities) Rules, 2014 with Companies (Prospectus and Allotment of Securities) Third Amendment Rules, 2019 thereby amending provisions of Rule 9A for reconciliation of Share Capital of the Unlisted Public Companies. Earlier Companies (Prospectus and allotment of securities) Third Amendment Rules, 2018 came into force w.e.f 2nd day of October, 2018 in which Rule 9A was inserted which made it mandatory for every Unlisted Public Company to issue the security only in dematerialized form and also facilitate dematerialization of all its existing securities in accordance with provisions of the Depositories Act, 1996 and regulations made thereunder. Further, an unlisted public company shall submit the audit report as per regulation 55A of the SEBI (DP) Regulation, 1996 on a half-yearly basis to MCA.

Exemption from Rule 9 is given to Government Company, Nidhi Company, and wholly-owned subsidiary company.

Date of Enforcement of Rules: The Rules shall come into force from 30th September, 2019.

Highlights of the amendment in the Rule 9A of Companies (Prospectus and Allotment of Securities) Rules, 2014 made by the MCA vide said notification is as under:

a. Earlier the said reconciliation was governed by the Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996. Vide said notification, henceforth it will be governed by the Securities and Exchange Board of India (Depositories and Participants) Regulations, 2018.

b. In accordance with the said amendment every unlisted public company except Nidhi Company, Government Company, and Wholly owned subsidiary company shall submit Form PAS-6 to the Registrar with such fee as provided in Companies (Registration Offices and Fees) Rules, 2014 within sixty days from the conclusion of each half-year duly certified by a company secretary in practice or chartered accountant in practice.

c. The due date for filing Form PAS-6 with MCA shall be 29th November, 2019 for the half-year ended on 30.09.2019 and 30.05.2020 for the half-year ended on 31.03.2020 by unlisted public companies. So, immediate steps are required to be taken by an unlisted public company to get their shares dematerialized if not done.

d. In furtherance, thereof the Company shall immediately bring to the notice of the depositories any difference observed in its issued capital and the capital held in dematerialized form.

Penalty: As there is no penalty prescribed under Rule 9A for non-compliance of this Rules, in that case, penalty as section 450 of the Companies Act,2013 shall be applicable i.e 10000/- on company and every officer in default and where the contravention is continuing one, with a further fine which may extend to Rs.1000/- for every day after the first during which the contravention continues.