In today’s connected global financial ecosystem, the International Securities Identification Number (ISIN) plays a lever role in being able to trade on what has been called a various alternative trading system, also enabling you to lower the administrative costs of first and second rounds. For companies that are contemplating issuing securities such as stocks, insurances or debentures, obtaining an ISIN is the first step to ensure their security is properly recognized by polite society. This manual will explain step by step how to get an ISIN for your own private limited company.
What is an ISIN?
An ISIN is a 12-character alphanumeric code that uniquely identifies the security from other securities. This code offers a worldwide standard for identifying various financial instruments such as equities, bonds, options, and consumer, financial and other derivatives indexed by currencies and stocks in France. The ISIN is composed of:
- Country Code (2 characters) – indicating the issuer’s country.
- Unique Identifier (9 characters) – a specific identifier for the issued security.
- Check Digit (1 character) – for validation purposes.
An ISIN is essential to efficient securities trading across the world’s various financial markets. Each ISIN is specific to a single security, which means that it is possible robustly to trace and trade the effect anywhere in the universe it may end up.
Why is ISIN Important to Companies?
For companies issuing securities, getting an ISIN is necessary for several reasons.
- Global recognition: An ISIN allows a company’s securities to be recognised internationally and thus be traded smoothly across borders.
- Market transparency: By assigning an ISIN to the securities that they issue, companies improve market transparency; they provide investors with a clear and standardized way to identify and trade those securities.
- Regulatory compliance: The fact that a company has an ISIN number means it is within financial regulations and standards. This makes it much easier for the company to comply with legal requirements, and it also lends weight to that company in financial markets
Procedures for Companies to Obtain an ISIN
1. Board Resolution Authorization
This is the starting point of the whole procedure. With this resolution, any member of the board or another assignee can apply for an ISIN number and finish filling in all required forms and procedures.
2. Net worth Certificate
The signed Net Worth Certificate is necessary if a company hopes to hear from either a Chartered Accountant who has been in practice for at least three years (PCA) or a Company Secretary who has been in practice for at least three years (PCS). One copy of this certificate, which must be signed by both the PCA and a duly authorized signatory of the company using your digital signature, serves as your company’s certificate of financial soundness.
3. ISIN Activation Form
To become an issuer with either CDSL (Central Depository Services Limited) or NSDL (National Securities Depository Limited), the ISIN Activation Form must be completed by the company. This includes two parts:
- Part A – Issuer details, company information
- Part B – Details about the specific security issue–type of issue, terms and other information
4. Tripartite Agreement
A Tripartite Agreement must also exist between the Issuer (company), RTA, and either depository (NSDL/CDSL). This agreement makes it clear where everyone stands and who does what with respect to handling securities. Each group involved will sign all three copies.
5. Audited Financial Reports
The issuer must submit its latest audited financial reports (including an auditor’s report and balance sheet), which provide a snapshot of the company’s financial situation. These records make the company’s condition clear to its auditors for their consideration and to potential investors as well.
6. GST Certificate
A signed copy of the company’s latest GST Certificate will be required, showing that it is in compliance with the rules of the Goods and Services Tax.
7. Memorandum and Articles of Association (MOA/AOA) and Certificate of Incorporation
The company shall also submit certified true copies of its Memorandum of Association (MOA) and Articles of Association (AOA) and its Certificate of Incorporation (or Certificate of Conversion, if applicable). These documents serve as business identification and company registration certificates.
8. Subsequent Events Post Balance Sheets
According to Zhao, if any new issue of shares has taken place after the published audited balance sheet date, or if the company’s Authorized Share Capital has been changed, then you need extra documents, including PAS 3, SH7 and copies of payment challans for the transaction
All the documents need to be processed through the RTA, which serves as a go-between for a company and its depository account
Why involve a registrar in an issue and share transfer agent (RTA)?
RTA is an indispensable participant in the ISIN application process. The RTA serves as the middleman among a company, the participants in the depository and others involved, and will ensure that the necessary documentation is properly provided. The RTA also assists in the management of the securities once the ISIN is issued, for example, by maintaining shareholder records and transferring securities. This greatly reduces the burden on companies in such activities and thus helps ensure that both procedures with any documentation required from an organisational or regulatory standpoint are complied.
Additional points for companies
With an ISIN, a company can offer for the first time overseas ordinary shares, it is available to attract fresh investment. This flexibility gives companies options as they seek to raise funds and can run advertisements in any of these places to generate interest. Having an ISIN opens up new opportunities for a company that go beyond mere compliance with regulations.. For companies, it may also be more difficult to solicit investment if they do not have an ISIN, because other brokers are unlikely and depositors less likely than they used to be.
In addition, companies should always be aware of new reporting requirements and regulations once an ISIN has been obtained. One of these is keeping proper records of all recent transferable securities issued or transferred and ensuring that the changes made to the securities (if, for example, newly issued or different shareholder details) are appropriately reflected in their dematerialized records.
Conclusion
Obtaining an ISIN allows the company to be more credible, attract investors, and open up opportunities to enter global markets. Moreover, it also simplifies the trading operation of securities, their transportation and their settlement, making the company’s financial instrument that much more attractive to potential customers.
ISIN is not just a number; it also offers a great deal of convenience for companies wishing to expand into new markets, meet with the necessary approvals, and boost investor confidence. Correct companies follow the process and work closely with regulatory bodies such as SEBI, depositories like NSDL and CDSL, RTAs, etc., they can ensure that an ISIN application process is easy and efficient. This will pave the way for successful securities issuances on the international stage.
