PAS-6 and Private Company Demat Compliance in 2026: Startup Founder Checklist
A founder may think the cap table is clean because the share certificates, register of members and MCA filings appear to match. In 2026, that is not enough for many private companies. If Rule 9B applies…
A founder may think the cap table is clean because the share certificates, register of members and MCA filings appear to match. In 2026, that is not enough for many private companies. If Rule 9B applies…
This article moves from the direct answer to the practical implications, common risks, action steps and the final BSA recommendation, so founders can read it in order and act with context.
Opening Hook
A founder may think the cap table is clean because the share certificates, register of members and MCA filings appear to match. In 2026, that is not enough for many private companies. If Rule 9B applies, securities must be handled through the demat ecosystem and the company must keep its reconciliation trail investor-ready.
The direct answer: a private company that is covered by Rule 9B of the Companies (Prospectus and Allotment of Securities) Rules, 2014 should issue securities only in dematerialised form, facilitate dematerialisation of existing securities, coordinate with a depository/RTA, and file PAS-6 within 60 days from the conclusion of each half year where applicable.
For startups, this matters because a non-compliant demat position can slow down fresh allotments, secondary transfers, investor exits, ESOP-related clean-up, rights issues and due diligence. It is exactly the kind of hidden compliance gap that appears late in a funding round.
What Is PAS-6 and Why Founders Should Care
PAS-6 is a reconciliation filing for share capital. In practical terms, it helps reconcile the company’s issued capital with the securities held in dematerialised and physical form.
For a startup, PAS-6 is not just a form. It is a cap table control document. It tells an investor, auditor or company secretary whether the securities records across the company, depository, RTA and statutory registers are aligned.
When a company is preparing for a fundraise, the diligence question is simple: can every issued share be traced from board approval to allotment form, share certificate or demat credit, register of members, consideration receipt and MCA filing?
If the answer is unclear, the cap table is not investor-ready.
Rule 9B in Plain English
Rule 9B was introduced through the Companies (Prospectus and Allotment of Securities) Second Amendment Rules, 2023. The rule brought dematerialisation obligations to private companies other than exempt categories such as small companies and government companies.
In practical founder language, Rule 9B means:
- Covered private companies must issue securities only in dematerialised form.
- Covered private companies must facilitate dematerialisation of existing securities.
- Promoters, directors and KMPs should hold securities in demat form before the company makes certain offers, buybacks, bonus issues or rights issues.
- Shareholders who want to transfer or subscribe to securities must work through demat mode once the rule applies.
- PAS-6 filing becomes part of the recurring reconciliation discipline.
The compliance burden is not limited to equity shares. Founders should examine all securities issued by the company, including preference shares and debentures, where relevant.
Which Startup Private Companies Are Commonly Caught
The rule is most relevant for private companies that are not small companies. Under the Companies Act framework, a small company is generally linked to paid-up share capital and turnover thresholds, subject to exclusions.
A startup may fall outside the small-company category if it has crossed the applicable paid-up capital or turnover thresholds, or if it is excluded because of its structure. Common examples include:
- A venture-funded private company with expanded capital.
- A private company that has issued preference shares.
- A holding or subsidiary company structure.
- A Section 8 private company where the rule applies based on structure.
- A company that has grown beyond small-company thresholds after a funding or business scale-up.
Founders should not rely on an old incorporation-stage assumption. Applicability should be checked at the end of the relevant financial year and again before any funding, transfer or corporate action.
What Changes After Demat Compliance Applies
Once Rule 9B applies, the company needs a working demat framework, not just a board note.
The practical steps usually include:
- Board approval for dematerialisation and ISIN admission.
- Appointment of Registrar and Transfer Agent, where required.
- Coordination with NSDL or CDSL through the RTA.
- ISIN creation for each class or type of security.
- Communication to security holders.
- Dematerialisation of promoter, director and KMP holdings before relevant corporate actions.
- Shareholder-level demat account coordination.
- Corporate action updates when fresh securities are allotted.
- PAS-6 reconciliation filing within the applicable timeline.
- Cap table and register of members alignment after each change.
This is why startups should not wait until the week of allotment. RTA onboarding, shareholder demat readiness and ISIN coordination can take time.
PAS-6 Timeline and Half-Yearly Discipline
PAS-6 is generally filed within 60 days from the conclusion of each half year. For many companies, that means founders should plan around the half years ending 31 March and 30 September.
| Half-year end | Practical filing window | Founder action |
|---|---|---|
| 31 March | Within 60 days from half-year end | Reconcile issued capital, demat holdings, physical holdings and corporate actions |
| 30 September | Within 60 days from half-year end | Confirm changes after allotments, transfers, buybacks or rights issues |
The filing should not be treated as a standalone upload. It should be backed by RTA data, depository records, board approvals, register of members, PAS-3 filings and shareholder-level documentation.
Funding and Transfer Risks Founders Miss
Demat non-compliance usually becomes urgent at the worst possible time: when money is waiting to come in or a shareholder wants to transfer shares.
Common risk points include:
- Investor allotment cannot be completed cleanly because ISIN readiness is pending.
- Founder or early shareholder shares remain in physical mode.
- Preference shares have no separate ISIN plan.
- PAS-6 was never filed after demat activation.
- Register of members does not match depository/RTA records.
- Share certificates, demat credit and PAS-3 dates do not align.
- Share transfer documentation is ready but the demat leg is not.
- The company assumes small-company status without checking latest audited figures.
The legal issue is one part. The commercial issue is larger: investors read these gaps as weak governance.
Startup Founder Checklist Before a Fundraise
Before opening a diligence data room, founders should ask the compliance team to verify:
- Does Rule 9B apply to the company?
- Is the small-company exemption still available?
- Has the board approved demat enablement?
- Has the company appointed an RTA/depository participant workflow where required?
- Are ISINs available for each class of security?
- Are promoter, director and KMP holdings in demat form where required?
- Are all post-demat allotments credited correctly?
- Are PAS-3 filings consistent with demat records?
- Has PAS-6 been filed for relevant half years?
- Is the cap table reconciled against statutory registers and RTA/depository data?
At BSA, we often advise founders to treat this as part of the fundraise readiness checklist, not only as an annual secretarial filing. That is why a serious company secretary partner can matter as much as a transaction lawyer. For founders searching for the Best CS firm in India for Startups, the real test is whether the advisor can connect compliance, cap table accuracy and investor diligence.
FAQ Section
Is PAS-6 applicable to private companies?
PAS-6 can become relevant for private companies covered by Rule 9B, especially private companies other than exempt small companies and other excluded categories. Applicability should be checked based on the company’s latest financial position and structure.
When should PAS-6 be filed?
PAS-6 is generally filed within 60 days from the conclusion of each half year. Companies should align the filing with RTA/depository records, statutory registers and corporate action history.
Does a startup need ISIN for every security?
If demat compliance applies, the company should assess ISIN requirements for each type or class of security, including equity shares and preference shares where applicable. This should be planned before a fresh allotment or investor transfer.
Why does demat compliance matter in due diligence?
Investors check whether the cap table is legally valid and operationally transferable. If shares are not dematerialised where required, or PAS-6/reconciliation records are weak, the fundraise can slow down or require pre-closing clean-up.
Founder / Business Takeaway
PAS-6 and demat compliance should be treated as cap table infrastructure. If your startup expects funding, secondary transfers, investor exits, ESOP exercises, rights issues or buybacks in 2026, verify Rule 9B applicability now and clean up the demat trail before the transaction clock starts.
Need expert support?
BSA can review your Rule 9B applicability, ISIN readiness, RTA coordination, PAS-6 history and cap table records before a fundraise or share transfer. Speak to BSA before the compliance gap becomes a closing condition.
Need help applying this to your company?
Share the company stage, urgency and issue. BSA can tell you what matters now, what can wait, and what should be handled before the next filing, investor conversation or expansion step.
Need help applying this to your company?
Share the company stage, urgency and issue. BSA can tell you what matters now, what can wait, and what should be handled before the next filing, investor conversation or expansion step.
Need help applying this to your company?
Share the company stage, urgency and issue. BSA can tell you what matters now, what can wait, and what should be handled before the next filing, investor conversation or expansion step.
Need help applying this to your company?
Share the company stage, urgency and issue. BSA can tell you what matters now, what can wait, and what should be handled before the next filing, investor conversation or expansion step.
Need help applying this to your company?
Share the company stage, urgency and issue. BSA can tell you what matters now, what can wait, and what should be handled before the next filing, investor conversation or expansion step.
