The Government is looking at the feasibility of mandating all unlisted companies to have their shares in dematerialised form, sources said as authorities step up efforts to weed out shell firms.
Preliminary discussions have been initiated on the proposal to dematerialise shares of all unlisted firms in a phased manner, which would still be a gargantuan task considering there are more than 16 lakh registered companies in the country.
While listed firms are required to maintain shares in dematerialised form, there is no such specific requirement in the case of unlisted entities -- both public and private. Source said deliberations are progressing between the Ministry of Corporate Affairs and markets regulator Sebi on the nitty-gritty of keeping shares of all unlisted companies in the dematerialised form.
The idea of dematerialisation of listed companies' shares was introduced in mid 1990s and took a long time before the scrips were converted into the dematerialised form.
The ministry is implementing the Companies Act, 2013 and all registered companies come under this law. Dematerialisation is the process by which physical certificates of an investor are converted to an equivalent number of securities in electronic form.