Do you hold shares of listed companies in its physical form? According to a recent notification by the Securities and Exchange Board of India (SEBI), physical share certificates will be worthless after December 5, 2018, if they have not been dematerialised. In addition, SEBI has also notified that transferring these securities will not be permitted unless it is in a dematerialised format. This move has been taken to eliminate fraudulent dealings and to keep a leash on unlawful gains. The dematerialising of physical shares offer a wide range of benefits. For example, there is a decrease in the costs involved when transferring share certificates, dematerialised shares cannot be embezzled, and the complicated procedure of getting shares transferred into a buyer’s name is simplified, thus saving time and energy of an investor.
If you hold physical shares, now is the time to convert physical shares to Demat before the deadline ends. Many brokers, banks and depository participants offer Demat accounts that can help you get facilitate your dematerialization move. You also have the option of opening a Trinity account with brokers like Kotak Securities that gives you the features of demat, trading and savings account with one account.
Here we guide you on how to convert physical shares to Demat.
- Choose any of the depositories to open a Demat account. The two primary depositories in India are the National Securities Depository Limited (NSDL) and the Central Depository Services (CDSL). With your essential documents such as identity proof and PAN card, you can open a Demat account.
- Surrender your share certificates by filling the Demat request form.
- The depositories send an electronic request to the registrar and transfer agent (RTA) along with your physical shares.
- The RTA scrutinises the physical shares and verifies its authenticity found genuine. The verified physical share certificates will be marked as “surrendered for Demat” on them.
- Physical share certificates take approximately 2 to 3 weeks to be converted into Demat.
- Once the dematerialised shares are recorded into your Demat account, the depository participant (DP) will provide you with a statement of your holdings.
- You can now begin trading online during market hours with your Demat account. You can choose to sell your existing shares or purchase additional shares from your Demat account.
On Misplaced Share Certificates
If you have lost the physical documents of your shares, you will need to file a police complaint and notifying the issuing company will furnish a set of forms that will need to be filled. Then, the issuing company will advertise your loss in prominent newspapers, permitting time for anyone else to stake a claim. If no one lays a claim, you can begin the process of verification as described above. If the issuing company is satisfied with the process, you will receive the shares in your Demat account.
It is worth your time and effort to convert all the physical shares into Demat before the deadline of December 5, 2018. Even if you do not intend to sell or trade, it is essential that you know how to convert physical shares into Demat at the earliest. A Demat account with a broker such as Kotak Securities can offer you the benefit of zero margins with zero-account opening charges. You stand to receive assisted training and can also trade aftermarket orders with expert recommendations from experienced professionals.