Amit Bachhawat

Amendment in Company Law

Sec 23 Amendment -> Cos (listing of equity shares in permissible jurisdictions) Rule 2024
2. Definitions
2. Definitions.— (1) In these rules, unless the context otherwise requires,— (a) “Act” means the
Companies Act, 2013 (18 of 2013); (b) “Authority” means the International Financial Services Centres
Authority established under section 4 of the International Financial Services Centres Authority Act,
2019 (50 of 2019); (c) “fees” means fees as specified under the Companies (Registration Offices and
Fees) Rules, 2014; (d) “permissible jurisdiction” means a jurisdiction specified in the First Schedule; (e)
“Schedule” means the Schedule annexed to these rules; (f) “Scheme” means the Direct Listing of Equity
Shares of Companies Incorporated in India on International Exchanges Scheme made by the Central
Government in the Ministry of Finance. (2)

2. Definitions.— (1) In these rules, unless the context otherwise requires,— (a) “Act” means the
Companies Act, 2013 (18 of 2013); (b) “Authority” means the International Financial Services Centres
Authority established under section 4 of the International Financial Services Centres Authority Act, 2019
(50 of 2019); (c) “fees” means fees as specified under the Companies (Registration Offices and Fees)
Rules, 2014; (d) “permissible jurisdiction” means a jurisdiction specified in the First Schedule; (e)
“Schedule” means the Schedule annexed to these rules; (f) “Scheme” means the Direct Listing of Equity
Shares of Companies Incorporated in India on International Exchanges Scheme made by the Central
Government in the Ministry of Finance. (2) The words and expressions used herein and not defined in
these rules but defined in the Act or in the Companies (Specification of Definitions Details) Rules, 2014
or the Scheme, shall have the meanings as respectively assigned to them in the Act, Rules or in the
Scheme.

3. Application
The provisions of these rules shall apply to — (a) unlisted public companies; (b) listed public
companies, so far as they are in accordance with regulations framed or directions issued in this regard
by the Securities and Exchange Board or the Authority, which issue their securities for the purposes of
listing on permitted stock exchanges in permissible jurisdictions.

4. Listing on permitted stock exchanges in permissible jurisdictions.

(1) An unlisted public company, which does not fall under rule 5 and which has no partly paid-up
shares, may issue equity shares for the purposes of listing on a stock exchange in a permissible
jurisdiction.

(2) The unlisted public company or its existing shareholders referred to in sub-rule (1) shall also comply
with the requirements of the Scheme.

(3) Listing of equity shares on permitted stock exchanges in permissible jurisdiction by an unlisted public
company which also intends to get its equity shares listed with any recognised stock exchange as
defined under clause (f) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) shall
also be in compliance with such conditions as may be specified by the Securities and Exchange Board of
India.

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4) The unlisted public company shall file the prospectus in e-Form LEAP-1 specified in the Second
Schedule along with the fees within a period of seven days after the same has been finalised and filed
in the permitted exchange.

(5) After the listing of the equity shares of a company on any of the stock exchanges in a permissible
jurisdiction, the company shall comply with Indian Accounting Standards as specified in the Annexure
to the Companies (Indian Accounting Standards) Rules, 2015 in preparation of their financial statements,
in addition to any other accounting standard, which they may be required to comply for the preparation
of the financial statements filed before the securities regulator concerned, or with the stock exchange
concerned, as the case may be.

5. Certain companies not eligible

A company shall not be eligible for issuing its equity shares for listing in accordance with these rules, in
case it —

(a) has been registered under section 8 or declared as Nidhi under section 406 of the Act;

(b) is a company limited by guarantee and also having share capital;

(c) has any outstanding deposits accepted from the public as per Chapter V of the Act and rules made
thereunder;

(d) has a negative net worth;

Explanation.— For the purposes of this clause, the expression “net worth” shall have the same meaning
as assigned to it under clause (57) of section 2 of the Act;

(e) has defaulted in payment of dues to any bank or public financial institution or non-convertible
debenture holder or any other secured creditor:

Provided that this clause shall not apply if the company had made good the default and a period of two
years had lapsed since the date of making good the default;

(f) has made any application for winding-up under the Act or for resolution or winding-up under the
Insolvency and Bankruptcy Code, 2016 (31 of 2016) and in case any proceedings against the company
for winding-up under the Act or for resolution or winding-up under the Insolvency and Bankruptcy Code,
2016 (31 of 2016) is pending;

(g) has defaulted in filing of an annual return under section 92 or financial statement under section 137
of the Act within the specified period.

THE FIRST SCHEDULE

• IFSC CENTRE IN INDIA -----→ PERMISSIBLE JURISDICTION

• N S E INTERNATIONAL EXCHANGE -----→ PERMITTED STOCK EXCHANGE

• INDIA INTERNATIONAL EXCHANGE -----→ PERMITTED STOCK EXCHANGE

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Companies (Prospectus and Allotment of Securities) Rules,2014

9. Dematerialisation of securities
(1) The promoters of every public company making a public offer of any convertible securities may hold
such securities only in dematerialised form:

Provided that the entire holding of convertible securities of the company by the promoters held in
physical form up to the date of the initial public offer shall be converted into dematerialised form before
such offer is made and thereafter such promoter shareholding shall be held in dematerialized form only.

(2) Every public company which issued share warrants prior to commencement of the Companies Act,
2013 (18 of 2013) and not converted into shares shall, –

(a) within a period of three months of the commencement of the Companies (Prospectus and Allotment
of Securities) Second Amendment Rules, 2023 inform the Registrar about the details of such share
warrants in Form PAS-7; and

(b) within a period of six months of the commencement of the Companies (Prospectus and Allotment of
Securities) Second Amendment Rules, 2023, require the bearers of the share warrants to surrender such
warrants to the company and get the shares dematerialised in their account and for this purpose the
company shall place a notice for the bearers of share warrants in Form PAS-8 on the website of the
company, if any and shall also publish the same in a newspaper in the vernacular language which is in
circulation in the district and in English language in an English newspaper, widely circulated in the State
in which the registered office of the company is situated.

(3) In case any bearer of share warrant does not surrender the share warrants within the period referred
to in sub-rule (2), the company shall convert the such share warrants into dematerialised form and
transfer the same to the Investor Education and Protection Fund established under section 125 of the
Act.

9A. Issue of securities in dematerialised form by unlisted public companies.

(1) Every unlisted public company shall –

(a) issue the securities only in dematerialised form; and

(b) facilitate dematerialisation of all its existing securities

in accordance with provisions of the Depositories Act, 1996 and regulations made there under.

(2) Every unlisted public company making any offer for issue of any securities or buyback of securities or
issue of bonus shares or rights offer shall ensure that before making such offer, entire holding of
securities of its promoters, directors, key managerial personnel has been demateriarised in accordance
with provisions of the Depositories Act 1996 and regulations made there under.

(3) Every holder of securities of an unlisted public company,_

(a) who intends to transfer such securities on or after 2nd October, 2018, shall get such securities
dematerialised before the transfer; or

(b) who subscribes to any securities of an unnlisted public company (whether by way of private
placement or bonus shares or rights offer) on or after 2nd October, 2018 shall ensure that all his existing
securities are held in dematerialized form before such subscription.

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(4) Every unlisted public company shall facilitate dematerialisation of all its existing securities by making
necessary application to a depository as defined in clause (e) of sub-section (1) of section 2 of the
Depositories Act, 1996 and shall secure International security Identification Number (ISIN) for each type
of security and shall in-form all its existing security holders about such facility.

(5) Every unlisted public company shall ensure that-

(a) it makes timely payment of fees (admission as well as annual) to the depository and registrar to an
issue and share transfer agent in accordance with the agreement executed between the parties;

(b) it maintains security deposit at all times, of not less than two years, fees with the depository and
registrar to an issue and share transfer agent in such form as may be agreed between the parties; and

(c) it complies with the regulations or directions or guidelines or circulars, if any, issued by the securities
and Exchange Board or Depository from time to time with respect to dematerialisation of shares of
unlisted public companies and matters incidental or related thereto.

(6) No unlisted public company which has defaulted in sub-rule (5) shall make offer of any securities or
buyback its securities or issue any bonus or right shares till the payments to depositories or registrar to
an issue and share transfer agent are made.

(7) Except as provided in sub-rule(s), the provisions of the Depositories Act 1996, the securities and
Exchange Board of India (Depositories and participants) Regulations, 2018 Regulations, 1996 and the
securities and Exchange Board of India (Registrars to an Issue and share Transfer Agents) Regulations,
1993 shall apply mutatis mutandis to dematerialisation of securities of unlisted public companies.

(8) Every unlisted public company governed by this rule 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.

(8A) The company shall immediately bring to the notice of the depositories any difference observed in
its issued capital and the capital held in dematerialised form.

(8) The audit report provided under regulation 55A of the securities and Exchange Board of India
(Depositories and participants) Regulations, 1996 shall be submitted by the unlisted public company on
a half-yearly basis to the Registrar under whose jurisdiction the registered office of the company is
situated.

(9) The grievances, if any, of security holders of unlisted public companies under this rule shall be filed
before the Investor Education and protection Fund Authority.

(10) The Investor Education and protection Fund Authority shall initiate any action against a depository
or participant or registrar to an issue and share transfer agent after prior consultation with the securities
and Exchange Board of India.

(11) This rule shall not apply to an unlisted public company which is:—

(a) a Nidhi;
(b) a Government company or
(c) a wholly owned subsidiary

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9B Issue of securities in dematerialised form by private companies

(1) Every private company, other than a small company, shall within the period referred to in sub-rule
(2) -

(a) issue the securities only in dematerialised form; and

(b) facilitate dematerialisation of all its securities,

in accordance with provisions of the Depositories Act, 1996 (22 of 1996) and regulations made
thereunder.

(2) A private company, which as on last day of a financial year, ending on or after 31st March, 2023, is
not a small company as per audited financial statements for such financial year, shall, within eighteen
months of closure of such financial year, comply with the provisions of this rule.

Provided that a producer company covered under this sub-rule shall, within a period of five years of
closure of such financial year, comply with the provision of this sub-rule.

Provided further that a private company, other than a Producer company, which is not a small company
as on 31 st March, 2023, may comply with the provision of this sub-rule by 30 th June, 2025.

(3) Every private company referred to in sub-rule (2) making any offer for issue of any securities or
buyback of securities or issue of bonus shares or rights offer, after the date when it is required to
comply with this rule, shall ensure that before making such offer, entire holding of securities of its
promoters, directors, key managerial personnel has been dematerialised in accordance with the
provisions of the Depositories Act, 1996 (22 of 1996)and regulations made thereunder.

(4) Every holder of securities of the private company referred to in sub-rule (2),

(a) who intends to transfer such securities on or after the date when the company is required to
comply with this rule, shall get such securities dematerialised before the transfer; or

(b) who subscribes to any securities of the concerned private company whether by way of private
placement or bonus shares or rights offer on or after the date when the company is required to comply
with this rule shall ensure that all his securities are held in dematerialised form before such subscription.

(5) The provisions of sub-rules (4) to (10) of rule 9A shall, mutatis mutandis, apply to the
dematerialisation of securities under this rule.

(6) The provisions of this rule shall not apply in case of a Government company.

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Section 67 + Rule 16: Restrictions on Purchase by Company or Giving of Loans by it for Purchase of its Shares
added
Rule 16: Employee Share Schemes

(1) Listed Company: Purchase shares only through stock exchange and not by private offers.

(2) Unlisted Company: Valuation of shares by Registered Valuer.

(3) Total Value of Shares Purchased: shall not exceed 5% of (PUSC + FR);

(4) Disclosures w.r.t Voting Rights not exercised directly by the employees in Board Report:

(a) Names of employees who have not exercised voting rights directly;

(b) Reasons for not voting directly;

(c) Name of the person who is exercising such voting rights;

(d) Number of shares held in favour of such employees and "% of such shares to total PUSC";

(e) Date of GM in which such voting power (VP) was exercised;

(f) Resolutions on which votes have been cast by persons holding such VP;

(g) Percentage of such VP to the total VP on each resolution;

(h) Whether votes were cast in Favour or Against the resolution.

Note: FC-I will now be filled with registrar, central registration centre (w.e.f 9-11-24) but all other
forms with ROC New Delhi.

Note: Doctrine of lifting of corporate veil removed from CA INTER MAY- 2025 ONWARDS

Note: Rule 12 of Share Capital Rules which deals with ESOP Rules removed from ICAI.

Note: Rule 13 which deals with Preferential issue removed.

Note: In cost Audit – all CRA Forms removed from ICAI Syllabus

Note: GDR Rules Conditions Removed