Rule 9B Demat explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Rule 9B of the Companies (Prospectus and Allotment of Securities) Rules, 2014 requires every private company that is not a small company to issue securities only in demat form and to facilitate dematerialisation of all its securities. In December 2025 the small company limits were raised, which leaves some companies asking whether they are now outside rule 9B, what to do about an allotment while the ISIN is pending, and how PAS-6 works with more than one ISIN. This guide answers from the text and says plainly where the text is silent. It reads the Companies Act, 2013 in the Ministry's consolidated text (last updated 29 July 2022) and the Rules as consolidated in the Ministry's e-book, consulted on 3 October 2026; later amendments should be checked.
Rule 9B(1) applies to every private company other than a small company. Under section 2(85) and rule 2(1)(t) of the Specification of Definitions Details Rules, a small company's paid-up capital and turnover may not exceed rupees ten crores and rupees one hundred crores, as substituted by the 2025 amendment dated 1 December 2025; a holding or subsidiary company, a Section 8 company and a company governed by a special Act cannot be small. Rule 9B(2) tests a company as on the last day of a financial year on its audited statements. The rule prints nothing about a company that later becomes small, and nothing about an allotment while the ISIN is pending. PAS-6 comes in through rule 9A(8), applied by rule 9B(5).
Where rule 9B stands
Rule 9B has these building blocks:
- Who: every private company other than a small company (9B(1)); a Government company is outside it (9B(6)).
- What: issue securities only in dematerialised form and facilitate dematerialisation of all its securities under the Depositories Act, 1996 (9B(1)).
- When: a private company which, as on the last day of a financial year ending on or after 31 March 2023, is not a small company as per audited financial statements for that year, must comply within eighteen months of the closure of that year (9B(2)). A producer company has five years from closure (first proviso); a private company other than a producer company that was not a small company on 31 March 2023 may comply by 30 June 2025 (second proviso).
- Before an offer: a company covered by 9B(2) making an offer for issue of securities, buy-back, bonus shares or rights offer after the compliance date must first ensure the entire holding of securities of its promoters, directors and key managerial personnel is dematerialised (9B(3)).
- Holders: a holder who intends to transfer securities on or after that date must dematerialise first; a holder who subscribes by private placement, bonus shares or rights offer must hold all his securities in demat form before subscribing (9B(4)).
- Borrowed machinery: sub-rules (4) to (10) of rule 9A apply mutatis mutandis (9B(5)).
For the general explainer, see our guide on rule 9B dematerialisation for private companies; if the company needs help with allotments and returns, see our allotment of shares and PAS-3 service. Offers by private placement are covered in our private placement step-by-step guide, and issues for non-cash consideration in our guide on shares issued other than for cash. Section 29(1A) of the Act itself says that for such class of unlisted companies as may be prescribed, securities are held or transferred only in demat form.
The small company test, after the 2025 limits
Section 2(85) defines a small company as a company other than a public company whose paid-up share capital does not exceed fifty lakh rupees "or such higher amount as may be prescribed which shall not be more than ten crore rupees" and whose turnover as per the profit and loss account for the immediately preceding financial year does not exceed two crore rupees or such higher amount as may be prescribed, not more than one hundred crore rupees. Rule 2(1)(t) prescribes ten crores and one hundred crores, by the amendment dated 1 December 2025; the earlier figures of two crores and twenty crores appear only in the e-book's note on the old text and are not the current law as the e-book prints it. The proviso to section 2(85) excludes a holding company, a subsidiary company, a Section 8 company and a company governed by a special Act.
Companies that were not small and now are
Rule 9B(2) fixes the test at the last day of a financial year ending on or after 31 March 2023, on the audited statements for that year. It then fixes a compliance period. It says nothing about what happens if the company's paid-up capital or turnover later fits within the higher limits, nor about whether a company that has already dematerialised can revert. We therefore state no conclusion. A company in that position should read rule 9B(1) and (2) with the current text of rule 2(1)(t), and take advice on which date governs.
An allotment while the ISIN is pending
Rule 9B(1)(a) says issue securities only in demat form, and rule 9A(4), applied by rule 9B(5), says the company facilitates dematerialisation by applying to a depository and securing an ISIN for each type of security. The rule prints nothing on allotment during the time between application and ISIN. The practical consequence of the words is that a company covered by 9B and past its compliance date should have its ISIN in place before it allots. Before any offer, rule 9B(3) also requires the entire holding of promoters, directors and key managerial personnel to be dematerialised.
PAS-6 and more than one ISIN
Rule 9A(8) requires every company governed by that rule to submit Form PAS-6 to the Registrar within sixty days from the conclusion of each half year, certified by a company secretary in practice or chartered accountant in practice, and rule 9A(8A) requires the company to bring to the depositories' notice any difference between issued capital and the capital held in demat form. Rule 9B(5) applies sub-rules (4) to (10) of rule 9A, so this half-yearly return reaches a private company covered by rule 9B. The text does not say that one form per ISIN is needed, nor that one form covers all ISINs: it speaks of "Form PAS-6" for the company. A company with equity and preference shares, or several classes, has an ISIN for each type of security (rule 9A(4)); take advice on how the form is completed for them, since the rules do not print it. Our guide on how to file Form PAS-6 covers the filing mechanics.
Table: rule 9B at a glance
| Question | What the text says |
|---|---|
| Does it apply to a small company? | No: rule 9B(1) covers private companies other than small companies |
| What is the current small company limit? | Paid-up capital up to ten crores and turnover up to one hundred crores (rule 2(1)(t) as substituted 1 December 2025); proviso exclusions in s.2(85) |
| When is a company tested? | On the last day of a financial year ending on or after 31 March 2023, on audited statements (9B(2)) |
| What if it later becomes small? | The rule is silent |
| Allotment while the ISIN is pending | The rule is silent; issue is in demat form only (9B(1)(a)) |
| PAS-6 | Rule 9A(8), applied by 9B(5): within sixty days of each half year |
| Government company | Outside the rule (9B(6)) |
Worked example (invented names)
Pinecrest Components Private Limited had paid-up capital of Rs 6,00,00,000 and turnover of Rs 40,00,00,000 for the year ended 31 March 2025, and is not a holding or subsidiary company. Under rule 2(1)(t) as substituted in December 2025, ten crores and one hundred crores are the ceilings, so on those two figures it fits within the small company limits. Whether the company's 31 March 2023 position or its later position decides its rule 9B duties is something rule 9B(2) does not resolve in words; the company records its facts and takes advice before relying on the exemption. If it is not small, it must issue only in demat form and file PAS-6 within sixty days of each half-year.
Common mistakes
- Using the old two crore and twenty crore figures.
- Assuming a holding or subsidiary company can be small.
- Allotting in physical form after the compliance date.
- Forgetting that promoters, directors and key managerial personnel must dematerialise before an offer (9B(3)).
- Missing the half-yearly PAS-6.
Need help with demat compliance or an allotment?
We can check whether rule 9B applies to your company, the ISIN and depository steps, and prepare the allotment records and returns. See our allotment of shares and PAS-3 service.
Key takeaways
- Rule 9B covers private companies other than small companies.
- Current small company limits: ten crores paid-up capital and one hundred crores turnover.
- Holding, subsidiary, Section 8 and special-Act companies cannot be small.
- The rule is silent on later becoming small and on allotment while the ISIN is pending.
- PAS-6 is half-yearly through rule 9A(8) and rule 9B(5).
Read next
- Rule 9B: Dematerialisation of Securities for Private Companies
- Rule 9A for Unlisted Public Companies
- ISIN Application by a Private Company
- Private Placement of Shares Step by Step
Disclaimer: Based on the Companies Act, 2013 in the Ministry of Corporate Affairs consolidated text (last updated 29 July 2022), the Rules as consolidated in the Ministry's e-book and the other official texts named in this article, as consulted on 3 October 2026. Later amendments, notifications, circulars, forms and fees should be checked. Formats are general drafts to be adapted to the company's articles and facts. This article is general information, not legal advice; check the official text before acting.