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A Step By Step Guide to Converting Physical Shares into a Demat Form

15 May 2024

Shares in a physical format held by your grandparents or parents will come to you only when they have been converted into a dematerialised form. According to a circular issued by the market regulator SEBI in April 2019, the request for transfer of shares will not be processed unless they are in dematerialised form. There are only two exceptions to this request, namely, transmission of shares and transposition of securities. 

Transmission is when the ownership title of the shares is being transferred via inheritance or succession. Transposition is when there is a re-arrangement or interchanging in the order of the shareholders.

  • Transfer of shares meaning and how to switch to a demat form?

In case, you own physical shares of a company that are not being actively traded, you will not be able to convert them to a demat form. Only those shares of companies that are actively being traded on the exchanges can be converted into demat form.

  • Opening a demat account

Opening a demat account is quite easy and can be done online as well. In case, you are opening a demat account offline, a representative from the brokerage house you opt for will come and collect your KYC documents such as PAN card and bank details. Once your demat account is open, you can start the process of changing your physical shares to a demat form. Factors to consider when opening a demat account

  • Converting shares to a demat form

In order to convert your shares to a dematerialised form, one is required to submit the dematerialisation request form (DRF). One DRF form will suffice for four share certificates. If there are more share certificates, then one is required to submit separate sets of DRFs for different companies.

The holder of the physical shares will have to submit the share certificates along with the DRFs and KYC documents to your broker. The broker will then send the transferable shares and your documents to a registrar and transfer agent who will then convert them into an electric form. Once your share certificates are converted, they will start showing in your demat account.

  • Cost for converting physical shares

The first cost sub-head you need to account for are the charges levied by your broker. Annual maintenance fee is levied by banks and broking companies usually in the range of Rs 200 to Rs 850. Transaction charges also usually differ from broker to broker and investors must enquire about these charges in the very beginning. Converting physical shares can cost close to Rs 150 to Rs 400 per share certificate and the whole process can be executed with the help of online portals as well. According to SEBI guidelines, the conversion process must be completed with 21 days, however, for some companies, it may take longer.

Open a demat account with Motilal Oswal and enjoy a smooth, hitch-free conversion of your physical shares

Related Articles: How to Open a Demat Account Without a Broker | Factors to Keep in Mind While Opening a Demat account | Factors to Consider When Opening a Demat Account 


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