How to Obtain an ISIN: Choosing Between NSDL and CDSL

1. What an ISIN Is, and Why You Need One Per Security Class

An ISIN (International Securities Identification Number) is a unique 12-character alphanumeric code that identifies a specific security — for example, INE081A01020. For Indian companies, the first two characters are always "IN" (the country code), followed by a 9-character alphanumeric identifier and a check digit.

The critical point for any company going through this process for the first time: a separate ISIN is required for each distinct class of security. If your company has issued equity shares, Series A CCPS, Series B CCPS, and a set of convertible debentures, that's potentially four separate ISINs — one for each class, each requiring its own application to the depository.

For startups with multiple funding rounds, it's worth mapping out the complete list of security classes before starting the ISIN application process — this avoids a piecemeal approach where ISINs are applied for one round at a time, each time triggering a fresh (though usually faster, once the company's basic documentation is on file) round of paperwork.

2. The ISIN Application Process

The process, in practice, runs through your appointed RTA rather than directly with the depository:

Step 1 — Appoint an RTA. A SEBI-registered Registrar and Transfer Agent (common names: Link Intime, KFin Technologies, Bigshare Services, Skyline Financial, Cameo Corporate Services) is appointed via a board resolution and a service agreement. RTA fees for unlisted/private companies typically range from roughly Rs. 3,000 to Rs. 20,000 per year depending on the scope of services and the size of the shareholder base.

Step 2 — Execute the tripartite agreement. A tripartite agreement is signed among the company (issuer), the RTA, and the chosen depository (NSDL or CDSL). This is the foundational document that establishes the company's relationship with the depository.

Step 3 — Compile and submit documents. Typical documentation includes: certified copies of the Certificate of Incorporation (and any name-change certificates), MOA & AOA, board resolution authorising ISIN admission and naming authorised signatories, audited financial statements, GST certificate, a net-worth certificate from a practicing CA (for certain categories), and a security-class-wise breakdown of the company's capital structure.

Step 4 — Depository review and fee payment. The depository reviews the submission, and on satisfactory verification, the company pays the prescribed admission and security deposit fees. The ISIN is then generated and communicated to the company and RTA.

Step 5 — Shareholders open demat accounts and submit DRFs. Once the ISIN exists, individual shareholders can begin the dematerialisation of their physical holdings — covered in detail in our companion article for investors.

3. NSDL vs CDSL — The Basics

India has exactly two SEBI-registered depositories, and both operate under the same regulatory framework (the Depositories Act, 1996, and SEBI regulations):

NSDL (National Securities Depository Limited) — India's first depository, established in 1996, originally promoted by IDBI, UTI, and the NSE. Its major institutional shareholders include IDBI Bank, NSE, HDFC Bank, Deutsche Bank, and SBI, among other leading financial institutions.

CDSL (Central Depository Services (India) Limited) — established in 1999, originally promoted by the BSE along with State Bank of India and other banks.

For the purposes of a private company seeking ISIN allotment for Rule 9B compliance (or for any other dematerialisation purpose), the two depositories are functionally near-identical: the regulatory framework, the documentation required, the fee structure, and the process timeline are all comparable. Neither depository is inherently "better" or "worse" for an unlisted company — the choice comes down to practical, company-specific factors rather than any structural difference between the two.

4. The Factors That Actually Drive the Choice

Your RTA's empanelment and recommendation. In practice, the single biggest factor is which depository your chosen RTA primarily works with for unlisted companies, and which they recommend based on their own operational efficiency. Most major RTAs are empanelled with both NSDL and CDSL, but may have a preferred workflow for one over the other for private/unlisted company ISINs — it's reasonable to ask your RTA directly which they recommend and why.

Where your shareholders already hold demat accounts. If a meaningful proportion of your existing or anticipated shareholders (e.g., institutional investors, VCs, or individuals who are active stock market participants) already hold demat accounts with Depository Participants (DPs) linked predominantly to one depository, choosing that depository can reduce friction at the individual dematerialisation stage — though in practice, most DPs (brokers and banks) offer accounts linked to both depositories, so this is rarely a hard constraint.

Dual-ISIN (connectivity with both depositories). If a company's shareholder base is genuinely split — some shareholders' DP accounts are with NSDL-linked DPs and others with CDSL-linked DPs — the company can establish connectivity with both depositories for the same security class. This adds a layer of cost (effectively duplicating the admission and annual fees) and is generally only worth considering for companies with a large, diverse shareholder base where single-depository connectivity would create genuine access issues for a significant number of shareholders.

Restriction/freeze mechanisms. Both depositories provide mechanisms for the company to restrict transfers — relevant for private companies whose articles of association or shareholder agreements require board/shareholder approval before any transfer. With CDSL, this is typically implemented via an undertaking for "freezing" signed at the time of ISIN admission; with NSDL, this is implemented via suspension of the ISIN for transfers. Either mechanism can be configured to align with the company's transfer restriction requirements — this is a conversation to have with the RTA regardless of which depository is chosen, since an unrestricted demat ISIN would otherwise allow shares to be freely transferred without the company's knowledge.

5. Costs to Expect

While exact figures vary by RTA and company size, the broad cost structure for ISIN admission and ongoing maintenance is similar across NSDL and CDSL:

One-time admission/joining fee: approximately Rs. 15,000 per company (per depository, if dual-ISIN)
Security deposit: a refundable deposit, with a minimum of around Rs. 10,000, scaling upward based on the company's paid-up share capital
Annual custody/maintenance fee: typically in the range of Rs. 5,000–Rs. 7,000 per year, again scaling with capital
RTA service fees: separate from depository fees, typically Rs. 3,000–Rs. 20,000 per year depending on the scope of RTA services (transaction processing, shareholder communication, PAS-6 support, etc.)

For a typical startup, the all-in cost of obtaining ISIN(s) and maintaining the demat infrastructure for a year is a modest line item relative to the compliance and transactional flexibility it provides — particularly given the restrictions on further fundraising and buybacks that apply to non-compliant companies under Rule 9B.

6. After ISIN Allotment — What Changes Operationally

Once the ISIN is in place, a few operational shifts follow:

The register of members moves (partially) to the depository. For dematerialised holdings, the depository's records become the authoritative record of ownership, with the company's RTA maintaining the link between depository records and the company's own register.

Corporate actions go through the depository. Future allotments (new funding rounds, ESOP exercises, bonus issues) for the dematerialised security class are processed as corporate actions through the RTA and depository, crediting shares directly to shareholders' demat accounts rather than issuing new physical certificates.

PAS-6 reconciliation becomes a recurring task. As covered in our companion article on Rule 9B, the company must file Form PAS-6 every half-year, reconciling the total issued capital against what's held in demat form (across NSDL/CDSL, if dual-ISIN) versus what remains in physical form — making accurate, up-to-date RTA records essential on an ongoing basis, not just at the point of initial ISIN allotment.