Rule 9A 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 9A of the Companies (Prospectus and Allotment of Securities) Rules, 2014 requires every unlisted public company to issue securities only in dematerialised form. Its eleven sub-rules also carry the ISIN, fee, security deposit, PAS-6 and grievance machinery that Rule 9B later borrowed for private companies.
Why Rule 9A matters to a private company adviser
The ICAI Handbook on Dematerialisation of Securities for Private Companies & Shareholders spends most of its first two chapters on Rule 9A, and there is a good reason for that. Rule 9B(5) provides that the provisions of sub-rules (4) to (10) of Rule 9A apply mutatis mutandis to dematerialisation under Rule 9B.
So a private company brought in by Rule 9B does not get a self-contained code. Almost everything it must actually do — apply to a depository, obtain an ISIN, inform holders, pay fees, maintain a deposit, file PAS-6, report capital differences — is written in Rule 9A and reaches it by reference.
Read the borrowing carefully. Rule 9B(5) picks up sub-rules (4) to (10) of Rule 9A — and that is all.
Sub-rules (1) to (3) are not borrowed, because Rule 9B writes its own versions of them, with its own trigger date. Sub-rule (11) — the Nidhi, government company and wholly owned subsidiary exemption — is not borrowed either. A private company that is a wholly owned subsidiary therefore gets no exemption from Rule 9B on that ground; the only exclusions on the private side are the small company (Rule 9B(1)) and the government company (Rule 9B(6)).
The practical consequence people miss most often is PAS-6. It sits in Rule 9A sub-rule (8), squarely inside the borrowed range, so a private company governed by Rule 9B files it.
The eleven sub-rules of Rule 9A
| Sub-rule | What it requires |
|---|---|
| (1) | Every unlisted public company shall (a) issue securities only in dematerialised form, and (b) facilitate dematerialisation of all its existing securities, in accordance with the Depositories Act, 1996 and the regulations made under it |
| (2) | Before any offer for issue, buyback, bonus issue or rights offer, the entire holding of securities of the company's promoters, directors and key managerial personnel must have been dematerialised |
| (3) | Every holder (a) intending to transfer on or after 2 October 2018 must dematerialise before the transfer; (b) subscribing on or after that date, whether by private placement, bonus or rights offer, must hold all existing securities in dematerialised form before subscribing |
| (4) | Apply to a depository as defined in section 2(1)(e) of the Depositories Act, 1996; secure an ISIN for each type of security; and inform all existing security holders of the facility |
| (5) | (a) timely payment of admission and annual fees to the depository and registrar and share transfer agent per the agreement; (b) maintain a security deposit at all times of not less than two years' fees; (c) comply with SEBI and depository regulations, directions, guidelines and circulars |
| (6) | A company that has defaulted in sub-rule (5) shall make no offer of securities, no buyback and no bonus or rights issue until the payments are made |
| (7) | Otherwise the Depositories Act, 1996, the SEBI (Depositories and Participants) Regulations, 2018 and the SEBI (Registrars to an Issue and Share Transfer Agents) Regulations, 1993 apply mutatis mutandis |
| (8) | Submit Form PAS-6 to the Registrar within sixty days from the conclusion of each half year, duly certified by a company secretary in practice or a chartered accountant in practice |
| (8A) | Immediately bring to the notice of the depositories any difference observed between the issued capital and the capital held in dematerialised form |
| (9) | Grievances of security holders are filed before the Investor Education and Protection Fund Authority |
| (10) | The IEPF Authority acts against a depository, participant or registrar only after prior consultation with SEBI |
| (11) | Rule 9A does not apply to an unlisted public company that is (a) a Nidhi, (b) a government company, or (c) a wholly owned subsidiary |
The date that fixes the shareholder's obligation
Sub-rule (3) turns on 2 October 2018, and it does two different things. A holder who intends to transfer must dematerialise the securities being transferred. A person who subscribes must ensure that all his existing securities are held in dematerialised form before subscribing.
This asymmetry is written into Rule 9A(3) and is carried across to Rule 9B(4) word for word, and it is easy to read past.
On a transfer, only such securities — the ones being transferred — need to be in demat form. On a subscription, the holder must ensure all his existing securities are dematerialised first. A shareholder with a large legacy physical holding can therefore sell a small parcel after dematerialising only that parcel, but cannot take up a single rights share without cleaning up the entire holding.
Under Rule 9A the trigger is the fixed date 2 October 2018. Under Rule 9B it is instead the date when the company is required to comply, which is company-specific.
The money obligations, and what stops if they are missed
Sub-rule (5) creates three continuing obligations, and sub-rule (6) attaches a real sanction to a default in any of them. The security deposit is the one most often overlooked — it is not a one-off, it must be maintained at all times, and it is not less than two years' fees, held with both the depository and the registrar and share transfer agent.
The consequence in sub-rule (6) is a freeze on corporate action: no offer of securities, no buyback, no bonus and no rights issue until the outstanding payments to the depository or the registrar are made. Note that this bites on default in sub-rule (5) generally, not only on the deposit.
Where the handbook's reproduction is imperfect
The Depositories Act is of 1996, not 1966. The handbook's answer to its own question on the legislative framework (A5) cites "the Depositories Act, 1966". Every other reference in the same book, and the rule itself, says 1996. Treat 1966 as a typographical error.
Sub-rule (7) is reproduced incompletely. As printed it opens "Except as provided in sub-rule(s)" with no number. The handbook's own restatement of the same provision later in Chapter 2 renders it as "Except as provided in sub-rule (8)". Read the rule from the notified text before relying on the opening words.
The restatement for private companies keeps Rule 9A's own wording. Where the handbook lists what a private company must comply with under Rule 9B(5), it reproduces phrases such as "dematerialisation of shares of unlisted public companies" and "grievances … of security holders of unlisted public companies". That is a faithful copy of Rule 9A, applied mutatis mutandis; read those words as referring to the private company in question.
Practical checklist
- Confirm the company is an unlisted public company before applying Rule 9A rather than Rule 9B.
- Check the three exclusions in sub-rule (11) — Nidhi, government company, wholly owned subsidiary.
- Clear the promoter, director and KMP holdings before any offer, buyback, bonus or rights issue.
- Obtain an ISIN for each type of security, not one for the company.
- Maintain the two years' fees security deposit continuously, with both the depository and the registrar.
- File PAS-6 within sixty days of each half year, certified by a practising CS or CA.
- Report any issued-capital versus demat-capital difference to the depositories immediately.
- Remember that a private company under Rule 9B inherits sub-rules (4) to (10) of this rule, but not sub-rule (11).
Common mistakes
- Assuming a wholly owned subsidiary is exempt when the applicable rule is 9B, not 9A.
- Treating PAS-6 as a public-company-only filing.
- Paying the security deposit once instead of maintaining it at all times.
- Dematerialising only the parcel being subscribed for, when the whole holding is required.
- Taking one ISIN for equity and preference shares together.
- Overlooking the sub-rule (6) freeze when planning a bonus issue.
Key Facts About Rule 9A
- Applies in: All states across India, under the relevant central law.
- Mode: Mostly online via the official government portal.
- Typical timeline: Ranges from a few days to a few weeks depending on the case.
- Non-compliance: May attract penalties, interest or late fees.
- Expert help: TaxClue completes the entire process end to end for you.
What does Rule 9A require?
Every unlisted public company must issue securities only in dematerialised form and facilitate dematerialisation of all its existing securities in accordance with the Depositories Act, 1996 and the regulations made under it.
What must be done before a buyback, bonus or rights offer?
Under sub-rule (2), the entire holding of securities of the promoters, directors and key managerial personnel must have been dematerialised before the offer is made.
Over 90% of compliance penalties in India arise from missed due dates — timely handling can save businesses thousands of rupees each year.
Rule 9A: a key compliance topic in Indian tax and corporate law that businesses and individuals must understand to remain compliant.