DAs per the Securities and Exchange Board of India (SEBI), from 2019, investors can sell the securities only if they are available in electronic form. One cannot transfer shares if they are in a physical paper form.
If you still have any physical share certificates, it is essential to convert them into dematerialised form with a depository. Dematerialisation is the process to convert physical shares of a company into electronic format. However, the investors can convert physical shares of an active company and trading on the stock exchange. The investors cannot convert the physical share certificates of companies delisted from the stock exchanges into Demat form, and unfortunately, physically held shares are now non-saleable.
Let us understand how to dematerialise physical share certificates.
Open a Demat account
First of all, the investor has to open a Demat account with a depository participant. A depository participant acts as an agent or intermediary between the investor and the depository.
A depository participant can be any authorised bank, stock brokerage or other private companies that offer Demat account opening services.
One can open a Demat account by providing KYC documents, like address proof and identity proof (PAN card, Aadhar card, passport size photographs, etc.), along with an account opening form.
If a single holder holds the share certificates, they can’t be dematerialised into a joint Demat account. Also, for jointly held shares, the Demat account needs to be opened in the name of all the shareholders, and the order of holding (first and second) in the new account will have to be the same as that of physical shares.
Submit dematerialisation Request Form (DRF)
After successfully opening the Demat account, the second step is to place a request to convert physical share certificates into dematerialised form via Dematerialisation Request Form (DRF). Use separate forms for shares of different companies.
Surrender shares in paper form
Along with the DRF, submit your physical shares certificates. Don’t forget to write ‘Surrendered for dematerialisation’ on every share certificate.
Once you submit all the documents, your Depository Participant will send a message electronically to the Registrar and Transfer (R&T) agent. The R&T agents do the job of maintaining your records.
You will receive an acknowledgement slip for your surrendered shares.
Shares converted in electronic form
Once the request is approved, your dematerialised shares will get credited to your Demat account, and the physical shares will be destroyed.
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