Wish To Convert Your Physical Share into Demat Form? Here Is A Precise Guide

As per the latest notification by the Securities and Exchange Board of India (SEBI), made concerning the transfer and conversion of physical shares, the physical shares and securities can be held by the shareholders but can not be transferred after April 1, 2019. This mandates the dematerialisation of physical shares and the dematerialised shares in the online Demat account.

Dematerialization refers to the conversion of physical share certificates into electronic shares. And Demat account refers to the account that holds or records the electronic shares and securities, owned by you. The two leading depositories - the National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL) regulate the Demat Account.

SEBI made it mandatory to transfer only the dematerialised shares post 1st April 2019 to avert the risks of theft, damage and fraud delivery. However, holding of physical shares is not yet banned by SEBI but that doesn't mean it is free from peril of loss and damage.

So, one should quickly convert their physical shares into Demat shares to not only tune in with the digital world of today but also to be all set for the online transfer of shares.

The process of dematerialisation of shares begins with the opening of Demat Account, followed by capitulation of all the physical share certificates to get credited in the Demat account.

Let's have a deeper dive in the whole process of dematerialisation.

Opening of Demat account

The first step begins with the opening of Demat account for which a shareholder needs to fill and submit an account opening Form along with the passport-size photograph and Identity & Address proof such as passport, Aadhar Card, Pan, etc.

Demat Account is opened by the Depository Participant (DP). Once the DP is done with the processing of all the documents, it opens a Demat account of your name and account number.

Depository Participant (DP) is SEBI-registered agent of the depository or an intermediary between the depository and the shareholder. Your bank or stock broker can also be your DP.

Demat Account is an account just like a bank account, holding Demat shares rather than money.

So far, we have discussed the manual process of getting a Demat account open. A Demat account can also be opened online in which a shareholder needs to upload the scanned copies of documents needed. In-Person verification is done when you digitally apply for Demat Account.

The capitulation of the share certificates

Once a Demat account is opened, all the physical share certificates have to be submitted by the shareholder to the DP alongside a Dematerialisation request form (DRF). It should be noted that separate DRFs are used for shares & securities of different companies.

Before the submission of share certificates, a shareholder needs to deface them which is done by writing "SURRENDERED FOR DEMATERIALISATION" on the certificates.

Receiving an Acknowledgement slip

After this, the DP verifies all the details such as the number of certificates, securities, their type, etc which are furnished in the DEMATERIALISATION REQUEST FORM. If the details of the Form are correct to the knowledge of the DP, he shall issue an acknowledgement slip to the shareholder.

Some of the details which need to be furnished in the DRF are as follows:

• DP-ID (ID issued to you by your depository participant)
• Account number
• Date
• Name of the Account Holder
• Choose physical certificate or option letter surrendered
• Total no. of securities to be dematerialized
• Security’s face value and name ( name same as on the certificate)
• Type of security (equity/ debenture/any other)
• Folio no., distinctive no., and the certificate no.
• Total no. of shares surrendered
• Signature and Acknowledgement

The credit of shares to the Demat account

Once the DRF and share certificates are submitted to the depository participant, a certificate, form and covering letter is sent to the issuer or Registrar and Transfer Agent by the DP.

Registrar and Share Transfer Agent, then, accepts the request for dematerialisation in his system if he finds everything in order. The request is then forwarded to the NSDL or CDSL, from where the particular number of Demat shares are ordered to be credited into your Demat account. The number of shares credited to the Demat account of the shareholder is equal to the number of share certificates he/she surrendered.

I advise to all the companies client & professional in related to finance, accounting, mutual funds and stocks & shares.