Dematerialisation of Shares for Sun Pharmaceuticals in India 2025

In recent years, the financial market of India has undergone a transformative shift towards digitization. One of the key elements of this change is the dematerialisation of shares. With regulatory mandates to streamline shareholding procedures, companies like Sun Pharmaceuticals are preparing for a fully electronic system of share management by 2025. Dematerialisation not only aligns with SEBI’s goals of transparency but also enhances efficiency in managing securities.

In this blog, you’ll explore the concept, parties involved, procedures, and the impact of dematerialisation on shareholders or stakeholders. You’ll also discover actionable insights to help companies meet compliance efficiently.

What is the Dematerialisation of Shares?

Dematerialisation of shares is the procedure of converting physical share certificates into electronic form. These digital securities are stored in an investor’s Demat account. It is managed by a depository participant (DP) under the regulation of SEBI. The move toward dematerialisation ensures safe, paperless, and cost-effective handling of shares.

For companies like Sun Pharmaceuticals, this shift is a significant step in aligning with India’s financial reforms and enhancing investor confidence. Dematerialisation replaces burdensome paperwork with electronic records. Therefore, it eliminates the risks, such as loss, theft, or damage of physical share certificates.

Who is Affected by the New Dematerialisation Requirement?

The dematerialisation of shares affects a wide range of shareholders within the financial ecosystem. It includes:

• Listed and unlisted companies that comply with SEBI regulations to maintain digital records of shares. Companies like Sun Pharmaceuticals need to ensure all their shareholders dematerialise their holdings.
• Shareholders and investors who own physical share certificates are required to convert them into digital format.
• Registrars and transfer agents who facilitate the dematerialisation procedure.
• Central depositories such as National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL) manage Demat accounts.

By 2025, regulatory bodies will ensure 100% dematerialisation for companies like Sun Pharmaceuticals to maintain efficiency and security.

Key Parties Involved in the Dematerialisation Process

The successful implementation of dematerialisation involves collaboration between several parties. It includes:

1. Company Board and Management: Responsible for initiating and overseeing compliance processes.
2. Registrars and Transfer Agents (RTAs): RTAs serve as intermediaries between the company, shareholders, and depositories.
3. Depositories: Entities like NSDL or CDSL store digital shares and ensure secure transactions.
4. Depository Participants (DP): These are agents appointed by depositories to manage an investor’s Demat account.
5. Shareholders or Investors: Holders of physical share certificates must actively participate by submitting dematerialisation requests.
6. Regulatory Bodies: SEBI and the Ministry of Corporate Affairs (MCA) regulate and monitor compliance with dematerialisation requirements.

Step-by-Step Procedure for Dematerialisation 

The dematerialisation of shares involves a systematic approach. A company like Sun Pharmaceuticals must stick to the following steps:

Step 1: Modify Articles of Association (AoA)

The first step for companies is to ensure that their Articles of Association (AoA) are aligned with dematerialisation regulations. The AoA must authorise the issuance and holding of shares in electronic form. It is a mandatory requirement under the Companies Act.

Companies like Sun Pharmaceuticals must conduct board and shareholder meetings to approve the necessary amendments in their AoA.

Step 2: Appoint a Registrar and Transfer Agent (RTA)

An RTA acts as a significant bridge in the dematerialisation process. Sun Pharmaceuticals, under the SEBI Act, have to appoint a registered RTA to help connect with the company, depositories, and investors. RTA ensures the easy flow of share transfer requests, and it also keeps track of the shareholder’s information.

Step 3: Obtain International Securities Identification Number (ISIN)

ISIN is a unique identification code assigned to each security for electronic transactions. Sun Pharmaceuticals must apply for an ISIN from a central depository like NSDL or CDSL. This code allows for the seamless identification and management of digital shares.

Step 4: Open a Demat Account

Opening a demat account by Sun Pharmaceuticals shareholders with a depository participant (DP) is mandatory. A demat account is necessary to maintain and trade shares in electronic form and to participate in trades, transfers, and other corporate actions.

Step 5: Submit Dematerialisation Request

After opening a Demat account, the shareholders must submit a form. It is known as the Dematerialisation Request Form, aka DRF. They have to submit the DRF along with physical share certificates to their DP. After that, the DP will verify the request and forward it to the company’s RTA for further processing.

Step 6: Compliance for Key Stakeholders

For companies like Sun Pharmaceuticals, ensuring compliance among shareholders is critical. The management must communicate with shareholders to raise awareness about the dematerialisation process. Moreover, companies must maintain updated records of dematerialisation holdings.

Step 7: Regular Reporting (PAS 6)

Companies are required to file the PAS-6 form regularly under the Companies Act. It is necessary for reporting their shareholding details. PAS-6 ensures transparency and accountability in maintaining electronic records. Sun Pharmaceuticals must submit these filings within the stipulated time to avoid penalties.

Professional Services for Share Transfers

Dematerialisation of shares marks a new dimension for companies such as Sun Pharmaceuticals in India. Converting physical shares into digital format can benefit the company in many ways.

• Security: There is no risk of loss, theft, or forgery with physical certificates.

• Efficiency: It simplifies share transfer, trading, and record-keeping processes.

• Cost Savings: It saves administrative costs incurred in printing, managing, and distributing physical certificates.

• Regulatory Compliance: The company will be in line with the mandates of SEBI and the broader goals of India’s financial digitisation.

• Investor Confidence: This will enhance transparency and boost shareholder confidence in the company’s operations.

Companies such as Sun Pharmaceuticals can reduce the hassle of share transfer and dematerialisation processes through partnerships with professional services. The experts help in:

• Regulatory audits to ensure compliance.
• Facilitating shareholder communication and coordination.
• Handling depository and RTA processes efficiently.

Companies can avoid legal complications and ensure smooth implementation of dematerialisation requirements by seeking expert guidance.

For Expert Guidance on Dematerialisation, Contact the Special Consultant, Infiny Solutions

Navigating the complexities associated with the dematerialisation of shares requires precision and expertise. Infiny Solutions offers professional services to ensure smooth compliance with dematerialisation requirements. Whether you’re managing shareholder records, coordinating with RTAs, or ensuring regulatory filings, Infiny Solutions, a prominent consultant based in India can assist you.

For expert guidance, contact expert consultant Infiny Solutions at 90279 00537 or email us at info@infinysolutions.com