## Public Offer of Securities to be in Dematerialised Form — Section 29

### The three buckets

Section 29 splits companies into three categories with different demat obligations:

Category	Obligation
(a) Companies making a public offer, plus other prescribed companies	Must issue securities only in dematerialised form
(b) Prescribed unlisted companies	Their securities shall be held or transferred only in dematerialised form
(c) Any other company	Optional — may issue in physical or demat form, and may convert existing physical securities into demat

### Why demat is being pushed

Dematerialisation eliminates the risks of physical certificates — forgery, loss, transfer-deed fraud, signature mismatch, and bad delivery. It also gives the regulator a complete audit trail of beneficial ownership.

### Compliance framework

Companies issuing in demat form must comply with:

The Depositories Act, 1996 and its regulations, AND
Rules 9 and 9A of the Companies (Prospectus and Allotment of Securities) Rules, 2014:
Rule 9 — Dematerialisation of Securities (general)
Rule 9A — Issue of Securities in Dematerialised Form by Unlisted Public Companies

Worked example

### Example 1

Example 1: A private limited company that has not been notified under the prescribed unlisted-company rules issues equity to two new investors. It may choose to issue in physical or demat form.

### Example 2

Example 2: A public limited company files DRHP for an IPO. Under Section 29(1), it must issue the IPO shares only in demat form — physical certificates are not an option.

⚠️ Common exam mistakes

Believing all companies must compulsorily issue in demat form — only public-offer companies and certain prescribed unlisted companies are compelled.
Confusing 'issue' with 'hold/transfer' — for prescribed unlisted public companies, even subsequent transfers must be in demat.

Bare-Act text Section 29 · Companies Act, 2013 · click to expand

Every company making public offer; and 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 thereunder.

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Public Offer of Securities in Dematerialised Form [Section 29]

Worked example

⚠️ Common exam mistakes