Reconciliation of Share Capital Audit Report (PAS-6)

Form PAS-6 is a half yearly document known as the ‘Reconciliation of Share Capital Audit Report,’ mandatory for submission by unlisted public companies to the Registrar of Companies (ROC). The primary purpose of submitting Form PAS-6 is to disclose and record any modifications in the share capital of these companies every six months. Certification of the form is a crucial step, and it must be attested by either a practicing Company Secretary (CS) or a Chartered Accountant (CA).

The introduction of Form PAS-6 by the Ministry of Corporate Affairs (MCA) was communicated through a notification dated September 10, 2018. In this announcement, the MCA incorporated Rule 9A (sub-rule 8) into the Companies (Prospectus and Allotment of Securities) Rules, 2014, via the Companies (Prospectus and Allotment of Securities) Third Amendment Rules, 2019. This rule mandates that unlisted public companies can only issue securities in dematerialized form, effective from October 2, 2018.

The inclusion of International Securities Identification Number or ISIN code is compulsory in Form PAS-6. Therefore, the company cannot complete the filing of Form PAS-6 in case ISIN has not been acquired, resulting in non-adherence to Rule 9A of the Companies (Prospectus and Allotment of Securities) Rules, 2014.

Applicability of the Form PAS-6

Form PAS-6 is applicable to all unlisted public companies engaged in the issuance of shares as per Rule 9A of the Companies (Prospectus and Allotment of Securities) Third Amendment Rules, 2019. However, the following categories of unlisted public companies are exempt from the requirement of filing Form PAS-6:

1. Nidhi company.
2. Government company.
3. Wholly owned subsidiary.

Rule 9A of the Companies (Prospectus and Allotment of Securities) Rules, 2014 is applicable to each class of security, and only one ISIN can be entered in Form PAS-6. Therefore, distinct forms are required to be submitted for various types and classes of securities. The company must provide Form PAS-6 for each ISIN allotted to it.

Securities Issuance by Unlisted Entities

Rule 9A of the Companies (Prospectus and Allotment of Securities) Third Amendment Rules, 2019 delineates guidelines governing the issuance of securities by unlisted public companies. In compliance with this rule, every unlisted public company is obligated to adhere to the following stipulations:

Dematerialization Requirement:

• Issue securities exclusively in dematerialized form.
• Facilitate the dematerialization of all existing securities in accordance with the provisions of the Depositories Act, 1996, and its regulations.

Compliance with Depositories Act, 1996:

• Ensure that the issuance of securities and the dematerialization process align with the provisions of the Depositories Act, 1996, and its associated regulations.

Director, Promoter, and KMP Holdings:

• Prior to actions such as the issuance of securities, buyback of securities, issuance of bonus shares, or rights offers, ensure that the entire holding of securities by directors, promoters, and Key Managerial Personnel (KMP) has been dematerialized.

Transfer and Subscription Requirements:

• Individuals intending to transfer securities post-October 2, 2018, must dematerialize the securities before initiating the transfer.
• Subscribers to securities (via bonus shares, private placement, or rights offers) after October 2, 2018, must confirm that all existing securities are held in dematerialized form before such subscription.

Company Responsibilities:

• Facilitate the dematerialization of all existing securities by applying to a depository as defined in Section 2(1)(e) of the Depositories Act, 1996.
• Obtain the International Security Identification Number (ISIN) for each type of security.
• Inform every existing security holder about the dematerialization facility.

Due Dates to File Form PAS-6

Form PAS-6 is a half-yearly form that the unlisted companies must file with the ROC within 60 days from the conclusion of the half-year. 

• For April-September Period – 29th November is the Due Date
• For October-March Period – 30th May is the Due Date

Penalty For Delay In Filing Of Form PAS-6

The company incurs a one-time penalty of Rs.10,000 for delayed submission of Form PAS-6. Furthermore, under Section 450 of the Companies Act, 2013, a daily penalty of Rs.1,000 is imposed on both the officer in default and the company for any ongoing default, capped at a maximum of Rs.2,00,000 for the company and Rs.50,000 for each officer in default.