The stock market regulator, the Securities and Exchange Board of India (SEBI), mandated in 2019 that all physical shares should be converted into a dematerialised or electronic form.
SEBI further said that while people can hold shares in paper format, they need to convert them into a demat form to trade in them. Hence, it is important to convert physical shares into a demat form. Here’s how to do it:
Table of Contents
Ways to Move Physical Shares In Dematerialisation Mode
1. Open a Demat Account
If you have physical certificates of shares, the first thing you should do is open demat account. You can do so with a stock broker or with a bank that offers brokerage services. Before opening a demat account, you should check whether a broker is reliable or not.
You should thoroughly analyse all the charges associated with a demat account, including annual maintenance charges, brokerage fees, dematerialisation and rematerialisation charges, etc.
You must also see the quality of the interface of a broker’s website. To open a demat account, you will have to provide proof of identity, proof of address, bank account proof, etc. Once this is done, you will move to the next step.
2. File a Request for Dematerialisation of Physical Shares
You have to get a dematerialisation request form (DRF) by visiting your broker’s or depositor participant’s (DP) website.
Then, you should fill out this form. The DRF form will ask you to provide the number of physical share certificates you have. It will ask you to provide the 12-digit alpha-numeric International Securities Identification Number (ISIN).
This number is allotted for the name of security of the company that issued you physical shares. It will also ask you to provide the face value of shares and type of security.
3. Surrender your Physical Shares Along With the DRF
Now, you should surrender your physical shares with the DRF. You need to use separate copies of DRF for shares of different companies.
You must clearly write “Surrendered for Dematerialisation” on the certificate of every physical share you have. Remember to get an acknowledgment slip for the physical shares you have surrendered.
4. Dematerialised Shares in Your Account
After your request for dematerialisation is approved post verification, you will receive dematerialised shares in your demat account and your physical shares will be destroyed.
Benefits of Having Shares in a Demat Form
1. Seamless Trading From Anywhere
You can trade demat securities from anywhere in the world. All you need is a laptop/mobile phone and internet connection.
This is not possible with physical shares because you need to call up your broker to sell such shares. Besides, you need to carry such shares with you to exchange them with the other party.
2. No Risk of Damage or Theft
As demat securities are in an electronic format, there is no risk of damage or theft. Once you have demat shares in your account, rest assured that they will remain there safely forever.
However, with physical shares, there is always a risk of theft or damage. Even if such shares do not get damaged or stolen, you are always worried about their safety, which causes unnecessary stress.
3. Easier to Keep Track
Once you have your shares in a demat form, you can easily keep track of them. You have to just visit the dashboard of your demat account and all the securities you own will be listed there.
Conclusion
In this day and age, it does not make sense to have physical shares because SEBI mandates that you cannot trade in such shares. Hence, if you have physical shares, you should apply to get them converted into dematerialised shares so that you can enjoy all the benefits of electronic shares.
