A Move to Unveil the Opaque Shares Transfer Prior To an IPO: Dematerialization

This Research paper throws light on the dematerialisation of shares prior to an IPO and its purpose is to eliminate the benami system, tax evasion, black money transfer and etc. from the market by bringing more transparency in the transaction of shares. When we say prior to an IPO or pre IPO that means it is about the companies which are not available to the public on the stock exchange market i.e Unlisted Companies. Decision to implement dematerialisation system in listed companies was enacted in the year 2011 itself so as to make the stock exchange transaction transparent whereas on the other hand unlisted companies were exempted from the implemented act concerning dematerialisation, in the year 2011. However, on March 2017, it was observed that India consists of 1.17 million active companies in which about 80,000 to 90,000 such companies are recognised as unlisted companies and on noticing such large number of active companies falling in the category of unlisted companies, government (MCA and SEBI) in the month of June, 2018, decided to make it compulsory for all the unlisted public and private companies to convert their physical shares into dematerialised form before 5th December 2018 with the purpose of eliminating benami holding, tax evasion, black money transfer and etc.