The Securities and Exchange Board of India has implemented certain regulations which will allow you to only trade shares plus invest in them that are in dematerialized format. The authorities took this particular step for simplifying the procedure of purchasing, marketing, and also transferring a company’s shares.
It is important to convert the physical share certificates into an electronic format in case you are holding these certificates and this should be done before selling or transferring the shares. Dematerialization happens to be a process of physical share transfer to the Demat account. For this, you need to open your Demat account at first with a depository participant before you can raise a request for converting your physical shares.
It was possible to hold shares as share certificates before 1997. However, this approach was not productive in the long run. There was a possibility for these to be destroyed or misplaced as well.
It was imperative for a person to buy the shares from brokers having a transfer form attached. It took almost one month to complete the whole process.
Fortunately, the Dematerialization of physical shares aided in solving these problems. There is no need for you to be concerned about the genuineness of these shares. Single share electronic records will be authenticated with ISIN. This has also helped to eliminate the issues of maintenance and storage.
The Process of Physical Share Transfer to Demat Account
- First, you need to open your Demat account.
- It will be possible to open the account with a depository participant who happens to be a stockbroker linking between a depository and an investor. For this, you need to submit KYC documents such as ID proof (passport, Aadhar card, PAN card, and so on), address proof plus a photograph as well as an account opening form.
- Bear in your thoughts which you want to open the Demat account withinside the call of each shareholder in case the stocks are held jointly. Moreover, the holding order (first and second) in the fresh account must be precisely identical to that of the physical shares.
- The paper shares have to be surrendered together with the DRF form.
- After opening your Demat account. It will be possible to place a request for the transfer of the physical share certificates.
- You need to surrender the paper shares together with a Dematerialization Request Form to the Demat company. It will be imperative to make use of separate forms for shares of various companies.
- You need to deface all the paper shares on all physical share certificates. You will receive an acknowledgment slip for this.
- After the approval of the request following the verification. There will be the destruction of your physical shares and you will be getting the dematerialized shares successfully.
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