Updated on: August 8th, 2024 4:51 PM

Form PAS-6: Reconciliation of Share Capital Audit Report

Form PAS-6 is a ‘Reconciliation of Share Capital Audit Report’ that unlisted public companies and private limited companies must submit on a half-yearly basis. The filing requirement is stipulated under Rule 9A(8) of the Companies (Prospectus and Allotment of Securities) Rules, 2014. This article aims to decode the various provisions and aspects of Form PAS-6, including its applicability, requirements, and the detailed filing process. Managing company compliance can be complicated, but IndiaFilings makes it easy. Ensure your business meets all regulatory requirements, including Form PAS-6, with our expert assistance.

Introduction of Form PAS-6 by MCA

On September 10, 2018, the Ministry of Corporate Affairs (MCA) introduced Form PAS-6. This notification added Rule 9A (sub-rule 8) to the Companies (Prospectus and Allotment of Securities) Rules, 2014, through the Companies (Prospectus and Allotment of Securities) Third Amendment Rules, 2019. Starting from October 2, 2018, this rule mandates that unlisted public companies issue securities only in dematerialized form. Also read :  PAS-7 Form: Form for Details of Pending Share Warrants

Form PAS-6: Key Points and Requirements

Form PAS-6 is an electronic form required under Rule 9A of the Companies (Prospectus and Allotment of Securities) Rules, 2014. Its purpose is to reconcile the issued capital of a company with the shares held in dematerialized form in CDSL or NSDL and those still in physical form. Here are the key points to understand:

• Purpose: The form helps identify and report any mismatches between the number of shares recorded in the company's Register of Members and the actual shares in electronic or physical form.
• Comparison: This form is similar to the quarterly certification required for listed companies under Regulation 76 of the SEBI (Depositories and Participants) Regulations, 2018, which must be submitted to stock exchanges within 30 days after the end of each quarter.
• Certification: The information provided in Form PAS-6 must be certified by a qualified professional, either a Company Secretary or a Chartered Accountant, who is in whole-time practice.

Statutory Provision for Filing Form PAS-6

Sub-rule (8) of Rule 9A of Chapter III, Part I of the Companies (Prospectus and Allotment of Securities) Rules, 2014 outlines the requirement to file Form PAS-6. Public companies have been mandated to file Form PAS-6 since 2019. With the introduction of Rule 9B through the Companies (Prospectus and Allotment of Securities) Second Amendment Rules, 2023, this requirement has been extended to private companies. According to sub-rule (5) of Rule 9B, "the provisions of sub-rules (4) to (10) of rule 9A shall, mutatis mutandis, apply to the dematerialization of securities under this rule 9B." Therefore, based on Rule 9B(5) and Rule 9A(8), Form PAS-6 is now also applicable to private companies (excluding small companies) where dematerialization is mandatory. This includes wholly owned subsidiaries of private companies and Section 8 companies with share capital. However, government companies are exempt from this requirement under Rule 9B(6).

Applicability of Form PAS-6

Form PAS-6 applies to all unlisted public companies that issue shares in accordance with Rule 9A of the Companies (Prospectus and Allotment of Securities) Third Amendment Rules, 2019. However, the following unlisted public companies are exempt from filing Form PAS-6:

• Nidhi companies
• Government companies
• Wholly owned subsidiaries

Applicability of Form PAS 6 for Private Limited Companies

In October 2023, the Dematerialisation of Shares became mandatory for all private companies following the introduction of Rule 9B into the Companies (Prospectus and Allotment of Securities) Rules 2014.  Previously, only public companies were required to dematerialize their securities under Rule 9A. As a result, private companies must now adhere to the same additional regulations that apply to public companies regarding dematerialization. One key requirement is the half-yearly return filings using Form PAS-6 to the Ministry of Corporate Affairs ('MCA').

Non- Applicability of Form PAS-6 to Public Companies

Rule 9A does not apply to certain categories of unlisted public companies, which include:

Nidhi Companies

These companies are formed to promote the habit of thrift and savings among their members. They accept deposits from and lend to their members only.

Government Companies

Companies in which not less than 51% of the paid-up share capital is held by the Central Government, any State Government(s), or jointly by the Central Government and one or more State Governments.

Wholly Owned Subsidiaries

• Companies where the entire share capital is held by another company (the holding company).
• As a result, Nidhi companies, government companies, and wholly owned subsidiaries are exempt from complying with the provisions of Rule 9A.

Non-Applicability of Form PAS-6 to Private Companies

Form PAS-6 does not apply to certain categories of private companies. These exemptions are in place to accommodate the unique characteristics and operational frameworks of these specific entities. The following categories of private companies are exempt from filing Form PAS-6: Small Private Limited Companies Small companies, as defined under the Companies Act 2013, are exempt from the requirement to file Form PAS-6. This category typically includes companies with a lower paid-up share capital and turnover, reducing their compliance burden. Government Companies Private companies classified as government companies, where not less than 51% of the paid-up share capital is held by the Central Government, any State Government(s), or jointly by the Central Government and one or more State Governments, are exempt from filing Form PAS-6. Wholly Owned Subsidiaries of Unlisted Public Companies: If a private company is a wholly owned subsidiary of an unlisted public company, it is exempt from filing Form PAS-6. This exemption helps streamline the compliance requirements for group companies.

Applicable Companies	Exempted Companies
Private Companies (excluding small companies)	Small Private Limited Companies
Public Companies	Government Companies (Private and Public)
Unlisted Public Companies	Nidhi Companies (Unlisted Public)
Wholly Owned Subsidiaries of Private Companies	Wholly Owned Subsidiaries of Unlisted Public Companies
Section 8 Companies with Share Capital

Purpose of Form PAS-6: Why was it introduced?

The introduction of Form PAS-6 served several important purposes:

• Enhancing Transparency: Form PAS-6 aimed to enhance transparency in the issuance and management of securities by requiring unlisted public companies & private limi to issue securities only in dematerialized form.
• Reducing Fraudulent Practices: The dematerialization of securities helps reduce the risk of fraudulent practices associated with physical share certificates, such as duplication and forgery.
• Streamlining Processes: The amendments aimed to streamline issuing and managing securities, making it more efficient and aligned with the practices followed by listed companies.
• Ensuring Accurate Records: The Reconciliation of the Share Capital Audit Report, facilitated by Form PAS-6, ensures that a company's share capital records are accurate and up-to-date. This reconciliation helps identify and address discrepancies between the issued capital and those in dematerialized form.
• Alignment with Best Practices: By mandating the dematerialization of securities for unlisted public companies & private companies, the MCA sought to align these companies with the best practices already followed by listed companies, thereby promoting a higher standard of corporate governance.

Overall, introducing e-form PAS-6 was a significant step towards improving the integrity, transparency, and efficiency of the introductive securities issuance process for unlisted public companies.

Issuance of Securities by Unlisted Companies

Rule 9A of the Companies (Prospectus and Allotment of Securities) Third Amendment Rules, 2019 outlines the regulations for issuing securities by unlisted public companies. Key requirements include:

Issuance and Dematerialisation 

• Unlisted public companies must issue securities only in dematerialised form.
• They must also facilitate the dematerialisation of all existing securities.

Compliance with the Depositories Act

The issuance and dematerialisation of securities must comply with the Depositories Act, 1996, and its regulations.

Dematerialisation of Directors', Promoters', and KMPs' Holdings

Before issuing any securities, buyback of securities, issuing bonus shares, or making a rights offer, the entire holding of securities of the company's directors, promoters, and Key Managerial Personnel (KMP) must be dematerialised.

Requirements for Security Holders

• Transfer of Securities: Any holder of securities who intends to transfer them after 2nd October 2018 must have the securities dematerialised before the transfer.
• Subscription to New Securities: Any holder subscribes to new securities (whether by way of bonus shares, private placement, or rights offer) after 2nd October 2018 must ensure that all existing securities are held in dematerialised form before such subscription.

Facilitation by Unlisted Public Companies:

• Application to Depository: Unlisted public companies must facilitate the dematerialisation of all existing securities by applying to a depository as defined in Section 2(1)(e) of the Depositories Act, 1996.
• Obtain ISIN: Secure the International Security Identification Number (ISIN) for each type of security.
• Inform Security Holders: Inform every existing security holder about the availability of the dematerialisation facility.

These requirements ensure unlisted public companies maintain transparency and compliance in their securities transactions by transitioning to an electronic format.

Demat Requirements for Private Limited Companies  

As of October 27, 2023, a new rule (Rule 9B) requires private companies to convert their physical shares into electronic form, known as dematerialization or Demat.

• Private Companies: If your private company was not classified as a small company by the end of the financial year ending on or after March 31, 2023, you must follow this rule.
• Deadline: These companies need to comply by September 30, 2024. Before September 30, 2024, you must issue all new shares in Demat form.

ISIN Requirement

ISIN stands for International Securities Identification Number. It’s a unique number for your shares in electronic form. To get an ISIN, connect with Depositories like NSDL or CDSL. IndiaFilings experts can assist you in dematerializing your shares and obtaining an ISIN for your private limited company.

Filing Form PAS-6 for Private Limited Company:

This form is used to reconcile your company’s issued shares with those held in Demat or physical form, ensuring everything matches up. While the deadline for Demat compliance is September 30, 2024, it’s unclear whether Form PAS-6 should be filed by March 31, 2024, or September 30, 2024.  To be safe, if your company is ready, you can file for the period ending March 31, 2024. A Company Secretary or Chartered Accountant must certify the information in Form PAS-6. Key Takeaway: If your private company is not classified as a small company, make sure you:

• Convert all shares to Demat form by September 30, 2024.
• Obtain an ISIN from a Depository.
• File Form PAS-6 on time to stay compliant.

Contents of Form PAS-6

Form PAS-6 is a detailed document that requires specific information about a company's share capital and securities. Here are the key contents required in Form PAS-6:

Company Incorporation Number (CIN) and ISIN:

The form must include the Company's Incorporation Number (CIN) and the International Securities Identification Number (ISIN) for each type of security. Details About the Company's Capital:

• Information on issued capital.
• Shares are held in dematerialised form with NSDL and CDSL.
• Shares are held in physical form.
• Reasons for any discrepancies between these figures.

Changes in Share Capital During the Half-Year:

• Any changes due to bonus issues, rights issues, ESOPs, private placements, conversions, amalgamations, capital reductions, buybacks, forfeitures, etc.

Details of Shares Held by Key Personnel

• The total number of shares held by directors, promoters, and Key Managerial Personnel (KMP) in physical and Demat form.

Demat Request Details

• The total number of Demat requests was confirmed after 21 days.
• Demat requests are pending beyond 21 days, along with the reasons for such delays.

Certification Details

• Details of the Company's Secretary (CS), if any.
• Information on the practising Company Secretary (CS) or Chartered Accountant (CA) certifying the form.

Due Date	Period for which Form PAS-6 is filed
29th November	For the April-September period
30th May	For the October-March period

ISIN is Mandatory for Filing PAS-6

The International Securities Identification Number (ISIN) is a unique identifier assigned to each security and is mandatory for filing Form PAS-6, a reconciliation of share capital audit report. The Ministry of Corporate Affairs (MCA) mandated the inclusion of ISIN in Form PAS-6 to ensure accurate identification of securities held by the company in dematerialized form with the depositories. Filing Form PAS-6 with accurate ISIN details is crucial for maintaining transparency and ensuring compliance with the provisions of the Companies Act, 2013, and the Companies (Prospectus and Allotment of Securities) Rules, 2014.

Procedure for Filing Form PAS-6

Filing Form PAS-6 is a structured process that requires careful attention to detail. Follow these steps to ensure correct filing: Step 1: Access the MCA homepage.

• Open your web browser and navigate to the Ministry of Corporate Affairs (MCA) website.

Step 2: Log in to the MCA portal with valid credentials.

• Click on the "Login" button located at the top right corner of the homepage.
• Enter your username and password, then click "Submit."

Step 3: Select “MCA Services” and then “E-Filing.”

• On the main menu, hover over "MCA Services."
• From the dropdown menu, select “E-Filing.”

Step 4: Select “Company Forms Download.”

• Under the “E-Filing” section, click on “Company Forms Download.”
• This will redirect you to a page where you can download various forms.

Step 5: Navigate to the header “Intimation regarding allotment of securities.

• Scroll down the list of forms until you find the section titled “Intimation regarding allotment of securities.

Step 6: Access “Half yearly return for reporting of shares held in Demat form (PAS-6).

• Please find the form titled “Half-yearly return for reporting of shares held in Demat form (PAS-6)” and click on it to download it.

Step 7: Enter company information.

• Open the downloaded form and start filling in the required details.
• Enter the Company Incorporation Number (CIN) and other relevant company information.

Step 8: Search for CIN using the search option (optional).

• If you do not know the CIN, use the search option available in the form to find it.

Step 9: Select CIN from the dropdown option (optional).

• After searching, select the appropriate CIN from the dropdown list provided.

Step 10: Fill up the application. Complete all required fields in the form, including:

• Details of the company's capital
• Shares held in dematerialised form (NSDL and CDSL)
• Shares held in physical form
• Reasons for any discrepancies in shareholding
• Changes in share capital during the half-year
• Total shares held by directors, promoters, and KMP in physical and Demat form
• Details of Demat requests confirmed after 21 days and pending beyond 21 days

Step 11: Save the web form as a draft (optional).

• If you need to pause, save the form as a draft to avoid losing your progress.

Step 12: Submit the web form.

• Once all fields are completed and reviewed, submit the form online.

Step 13: An SRN (Service Request Number) is generated upon submission.

• After submission, a Service Request Number (SRN) will be generated. Save this SRN for future reference and correspondence with MCA.

Step 14: Affix the DSC (Digital Signature Certificate).

• Attach the digital signature of the Director, CEO, CFO, or Company Secretary as required. Provide relevant identification details:
  • DIN for a Director
  • PAN for the CEO or CFO
  • Membership number for the Company Secretary

Step 15: Upload the DSC-affixed PDF document on the MCA portal.

• Convert the form to a PDF, affix the digital signature, and upload the DSC-affixed document on the MCA portal.

Step 16: Pay the required fees.

• Complete the payment process within the specified timeframe:
• If the DSC-affixed PDF is not uploaded within 15 days of SRN generation and payment is not completed within 7 days or due date + 2 days, the SRN will be cancelled.

Step 17: An acknowledgement is generated.

• After successful submission and payment, an acknowledgement will be generated. Save and print this for your records.

Penalty for Non-Filing of Form PAS-6

If there is no specific penalty prescribed under Rule 9A of the Companies (Prospectus and Allotment of Securities) Rules, 2014, for non-compliance, then Section 450 of the Companies Act, 2013 will apply. Section 450 of the Companies Act, 2013:

• General Penalty: If no specific penalty or punishment is provided for non-compliance with any provision of the Companies Act, 2013, or the rules made thereunder, the following penalties apply:
• Fine: The company and every officer of the company who is in default, or any other person, shall be punishable with a fine which may extend up to Rs. 10,000.
• Continuing Contravention: In case the contravention continues, an additional fine of up to Rs. 1,000 per day can be levied for every day after the first during which the contravention continues.

Conclusion

In conclusion, Form PAS-6 plays a crucial role in ensuring the transparency and accuracy of share capital records for unlisted public companies and certain private limited companies. By mandating the dematerialization of shares and requiring detailed reporting, the Ministry of Corporate Affairs (MCA) aims to align the practices of these companies with those of listed entities, thereby reducing fraudulent practices and enhancing governance standards. Companies must adhere to the filing requirements and timelines to comply with the Companies Act, 2013 and the associated rules. For private companies, obtaining an ISIN and transitioning to electronic share formats by the specified deadlines is essential to avoid penalties and ensure seamless regulatory compliance.

Stay Compliant with IndiaFilings!

Navigating company compliance can be complex, but IndiaFilings makes it simple. Ensure your business meets all regulatory requirements, including Form PAS-6, with our expert assistance.