How to Convert Physical Shares to Demat Account | Motilal Oswal
How to Convert Physical Shares to Demat Account | Motilal Oswal

How to convert your physical shares into demat form

Have you been stuck with physical shares and wondering what to do? You must have read the recent SEBI circular that after December 05th transfer of physical shares will not be permitted. Post that date, all transfers will only be permitted in demat form. What it means is that if you are holding on to physical shares then you will have to necessarily dematerialize these shares before December 05th so that you can still sell them in the open market. Selling physical shares after December 05th almost becomes impossible as transfers will not be permitted in physical form. The question is how do you dematerialize your physical shares and convert them into demat. The process takes about 1 month and is quite simple. It should happen hassle free if all the documentation is taken care of. Here is what you need to know. If you are wondering how to sell physical shares, then a better way is converting your physical shares into electronic form. Once you understand how to convert physical shares into demat, you will realize that the process is actually quite simple.

 

What you need to know about dematerializing your physical shares
You need to know the following key points about dematerializing before you even surrender your shares for demat

You must check that the shares you are holding in physical form are admitted to dematerialization. Holdings in only such securities can be dematerialised. You can procure this list from the websites of NSDL or CDSL.

Before sending the shares for demat check that the physical shares are registered in your name and that the name on the certificate perfectly matches with the name of your  online demat account.Any major discrepancy in the name between physical certificate and the demat account will led to rejection. Of course, minor spelling errors or use of initials will be permitted if the signatures match to perfection.

In case of joint holders ensure that the physical shares and the demat account should be in joint names and also in the same order. For example, if in the certificate Rajesh is the first holder and Akanksha is the second holder, then the demat account should also be in the same order. If the same set of joint holders held securities in different sequence of names, these joint holders by using ‘ Transposition cum Demat facility’ can dematerialise the securities in the same account even though share certificates are in different sequence of names.

Ensure that the signature of the client on the Dematerialisation Request Form (DRF) tallies with the specimen signature available with the Issuers or its R & T agent and also with the specimen signature available with the master record of the DP.

In the normal course you will receive demat confirmation in about 30 days from the date of submission of demat request to the DP subject to there being no objections and no grounds for rejection of the DRF.

Understanding the actual process of dematerializing physical shares

If you get your demat process precisely done with all documentation in place, then the entire demat process will be a lot smoother. Here are the key steps in the process of dematerializing you physical shares..

First step is to submit a request to the DP in the Dematerialisation Request Form (DRF). This should be accompanied with the physical share certificates of securities to be dematerialised. Before submission, the client has to deface the certificates by writing "SURRENDERED FOR DEMATERIALISATION".

The depository participant (DP) will verify that the form is duly filled in and the number of certificates, number of securities and the security type (equity, debenture etc.) are as given in the DRF. If the form and security count is in order, the DP will issue an acknowledgement slip duly signed and stamped, to the client. Keep a copy of this slip.

DP will verify the client's signature on the DRF with the specimen signature in the account opening form. If the signature differs, the DP should cross-check the identity of the client. DP will also compare the names on DRF and certificates with the client account. Additionally DP also checks the paid up status, ISIN, lock-in status, distinctive numbers etc. Mismatch of any of the above can be grounds for rejection by the DP and hence you must cancel your physical certificates only after all these are thoroughly checked by the DP and approved.

If the securities are in order, the details of the request as mentioned in the form are entered in the software provided by NSDL / CDSL to the DP and a Dematerialisation Request Number (DRN) is generated by the system. The DRN so generated is entered in the space provided for the purpose in the dematerialisation request form.

The demat request is then sent to the Registrar and Transfer Agent (RTA) electronically. One of the largest RTAs in India is Karvy. The DP will fill the relevant portion viz., the authorisation portion of the demat request form. The DP will also punch the certificates on the company name so that it does not destroy any material information on the certificate.

As the next step, the DP will despatch the certificates along with the DRF and a covering letter to the RTA.

The RTA will verify the DRF and the despatched certificates with the master register of the company to check for duplicate certificates, fake certificates, master signature mismatch etc.

As the next step, the RTA confirms acceptance of the DRF in the system and the same will be confirmed in the DP management system only if everything is found to be in order and there are no objections at the RTA end.

The DM will electronically authorise the creation of appropriate credit balances in the client's account. The DPM will credit the client's account automatically. Normally, the DP informs the client of the changes in the client's account following the confirmation of the request, and this done by an SMS alert.

The entire process end-to-end takes around 20-25 days if all documents are in order. If the process takes more than 35-40 days, you can escalate the matter with NSDL/CDSL and later with SEBI.
 

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