Note: this article applies only to funds that invested into Indian portfolio companies before April 14, 2025. If your fund is making an investment after that date, please see this article.
What is the regulation?
Effective September 30, 2024, Indian regulations now require most private companies registered in Indian to hold their securities in dematerialized or “demat” format (i.e. digital format). Indian companies subject to the regulations must facilitate the dematerialization of company shares, including U.S. shareholders, and may only offer or transfer securities in dematerialized form.
Whether the fund is required to open a demat account depends on the status and circumstances of the Indian portfolio company, as exceptions may apply. For example, Indian companies that fall within the definition of a "small company" are exempt from the dematerialization requirements.
We strongly encourage you to confer with the portfolio company and your own legal counsel to determine if it is required or advisable for your fund to open a demat account at this time, or to reserve capital in case it becomes required or advisable in the future.
Does this apply to my fund?
Please note that the deadline has been extended to June 30, 2025.
If your fund has previously made investments into one or more Indian portfolio companies, you may be required to open a demat account and dematerialize the shares. Certain key shareholders may be required to dematerialize their holdings under Indian law. Even if your fund is not required to open an account under Indian law, a demat account may become necessary in the future based on the portfolio company's actions (e.g. additional fundraising or an exit).
We strongly encourage you to confer with the portfolio company and your own legal counsel to determine if it is required or advisable for your fund to open a demat account at this time, or to reserve capital in case it becomes required or advisable in the future.
If your fund is making its first investment into an Indian company after April 14, 2025, opening a demat account for the fund is required. You can find more details here.
Is there an alternative to complying?
The regulation carves out certain exemptions. You should consult directly with the portfolio companies and your legal counsel to determine the requirements for your fund’s unique circumstances. Even if your fund is AngelList-advised, it is not possible for us to determine whether your fund is exempted from this requirement without information from the portfolio company.
Can AngelList open a demat account on behalf of my fund?
Yes. See this article for additional details.