Indian Dematerialization Account ("Demat") Requirements

What is the regulation?

Indian regulations now require all company shares, public and private, to be held in dematerialized or “demat” format (i.e. digital format). Certain institutions are authorized to offer these accounts. Indian regulators have given a deadline of September 2024 to have all existing company shares dematerialized. As such, AngelList funds with live investments in Indian portfolio companies will need to set up demat accounts.

 

Does this apply to my fund?

This applies to all funds with live investments in Indian portfolio companies. This includes funds that have already invested in Indian portfolio companies.

 

How long will this apply to my fund?

This will apply to funds for as long as they have live investments in Indian portfolio companies.

 

What do I need to do to comply?

Setting up a demat account requires a fund to procure a PAN and provide extensive fund information, either directly to a bank or to a third party that assists in setting up the bank account on the fund’s behalf.

You will need to:

  • Procure a PAN (Permanent Account Number) on behalf of the fund
  • Set up a demat account for your fund
  • Provide the portfolio company with the fund’s demat account details so that any investments can be transferred to the account

 

Is there an alternative to complying?

The regulation does not carve out any exemptions. However, you may consult directly with the portfolio companies and your legal counsel to determine whether any alternatives exist.

 

Does this regulation apply to my fund if I have Indian LPs?

This regulation only applies to funds that have live investments in Indian portfolio companies.

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