In case you have unused physical share certificates in your residence then this article is for you. According to the order of the market regulator SEBI (Securities and Exchange Board of India), it is only possible for the shares in the electronic format to be transferred or sold at the stock markets. However, it is imperative to convert physical shares to demat for trading them. The procedure of converting the physical shares into electronic form is known as dematerialization. Here, you must bear in mind that only the active shares of a company can be converted.
Benefits to Convert Physical Shares to Demat
Below, we have mentioned some advantages offered by dematerialized shares for the investors.
- Accessibility – Every single share record will be held online and electronically. In this way, you will be able to access dematerialized shares anytime anywhere through the Internet.
- Safety – There is no need for you to be concerned about the authenticity of these types of shares since all electronic records will be genuine. It is not feasible to fake or forges dematerialized shares.
- Security – Dematerialized shares do not come with any risk of theft or unauthorized access as compared to physical share certificates. The reason for this is that you need to open an account for storing the shares which are protected by a password.
- Convenience – One more notable advantage to converting physical shares to Demat is that due to the electronic nature, the issues associated with maintenance and storage have been alleviated. There is no need for you to be concerned about any lost or damaged share certificate whatsoever.
The dematerialization process
- Firstly, a Demat account has to be opened with a DP which happens to be an intermediary between the depositor and the person in question.
- Following this, a dematerialization request form has to be filled out after opening the account. Surrender the physical shares to the DP while doing so.
- After submission of all the documents, a message will be sent by the DP to the R & T agent who has the responsibility of maintaining the records.
- Next, there will be the generation of a dematerialization registration number.
- The agent will verify the authenticity of all the documents submitted by you.
- After that, your name will be replaced by the name of your DP. Moreover, the number of physical shares is going to be recorded in the account of the Register of Members.
- After the completion of this process, an acknowledgment will be generated asserting that the record modifications have been done.
- Lastly, your shares will become credited to your Demat account.
Many investors are not able to remember their investments although the banks will keep them for 7 years. However, the bank will not be responsible for the amount following the completion of 7 years. In that case, these amounts will be transferred to the IEPF (Investors Education and Protection Fund). It will be imperative for you to ask for an IEPF refund for getting the amount back. For this, you can take the help of consultants who will make the entire process simple for you.