Section 29 Companies Act: Public offer of securities to be in dematerialized form

Section 29 of Companies Act: Corporate Governance & Statutory Compliance

Official Bare Act Text

Override / Mandate Mens Rea (Intent) Actus Reus (Conduct) Punishment Limitation Monetary

1. Notwithstanding anything contained in any other provisions of this Act,

a. every company making public offer; and

b. such other class or classes of public companies as may be prescribed, shall issue the securities only in dematerialised form by complying with the provisions of the Depositories Act, 1996 and the regulations made there under.

2. Any company, other than a company mentioned in sub-section (1 ), may convert its securities into dematerialised form or issue its securities in physical form in accordance with the provisions of this Act or in dematerialised form in accordance with the provisions of the Depositories Act, 1996 and the regulations made there under.

Statutory Defined Terms in this Section: (Click any term for official legal definition)

Company Sec 2(20) Director Sec 2(34) Tribunal Sec 2(90)

Legal Commentary & Landmark Judgments: Section 29

Section 29 mandates that every company making a public offer of securities, and prescribed classes of unlisted public companies, must issue and hold securities exclusively in dematerialized form.

Compulsory Dematerialization for Public Offers: Every corporate entity raising capital through a public offer must issue securities only in dematerialized form under the Depositories Act, 1996.
Prescribed Unlisted Entities: Empowers the Central Government to mandate compulsory dematerialization for unlisted public companies (enforced via Rule 9A of the Prospectus and Allotment of Securities Rules, 2014).
Dematerialization Option for Other Companies: Any other company may convert its securities into dematerialized form in accordance with the Depositories Act, 1996.

Key Landmark Precedents:

SEBI v. National Stock Exchange of India Ltd., (2012) 6 SCC 664: The Supreme Court recognized that dematerialization is a cornerstone of investor protection that eliminates counterfeit certificates, forgery, and bad deliveries in Indian capital markets.
Calcutta Stock Exchange Ltd. v. SEBI, (2015) 128 CLA 1 (Cal): Held that statutory dematerialization mandates under Section 29 override private articles of association, enforcing electronic transparency across all public corporate offerings.

Courtroom Practice & Strategic Litigation Guidance:

In unlisted public companies, verify compliance with Rule 9A under Section 29(1A). Promoters cannot transfer or subscribe to fresh shares unless their entire existing holding is dematerialized; transactions in physical certificates are unenforceable and vulnerable to RoC scrutiny.

Section 29: Public offer of securities to be in dematerialized form

Section 29 of Companies Act: Corporate Governance & Statutory Compliance

Legal Commentary & Landmark Judgments: Section 29