National Securities Depository Limited (“NSDL”) vide circular no. NSDL/POLICY/2025/0071 dated June 03, 2025, has introduced additional requirement on the transfer of shares of a Private Company. This measure aims to ensure adherence to the restriction on share transfers as stipulated under Section 2(68) of the Companies Act, 2013. In accordance with this requirement, the demat account holder must, along with the Delivery Instruction Slip (DIS), submit a confirmation or consent letter issued by the concerned private company to the Depository Participant, validating the transfer of shares.

The summary information herein is based on notification issued by NSDL dated 3rd June, 2025. While the information is believed to be accurate, we make no representations or warranties, express or implied, as to the accuracy or completeness of it. Readers should conduct and rely upon their own examination and analysis and are advised to seek their own professional advice. This note is not an offer, advice or solicitation. We accept no responsibility for any errors it may contain, whether caused by negligence or otherwise or for any loss, howsoever caused or sustained, by the person who relies upon it.

Mandatory Company Consent for Share Transfers Held in Demat Form by Private Companies In today’s digital era, dematerialized (Demat) shares have become the norm, simplifying the process of buying, selling, and transferring securities. However, when it comes to private limited companies, the rules around share transfers—especially those held in Demat form—are not quite as straightforward. In this post, we’ll explore why company consent remains mandatory for share transfers in private companies, even if the shares are held in a Demat account, and how the process typically unfolds.