Have you Dematerialized your physical shares?

Dematerialize of Physical Shares

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As, per the Securities and Exchange Board of India (SEBI), directives on June 08, 2018, it becomes mandatory for the investor to dematerialize all physical securities for effecting transfers by December 05, 2018. This means post 5th December, all requests for transfer of physical shares will have to be in the electronic form i.e. demat form only.

If you have not dematerialized it yet, then get it done before 5th December 2018. As per the data released, in India, there are more than Rs. 10,000 Crore of Physical Shares still lying idle which might attract to lost, theft, forgery, and tore kind of related activities. Subsequent to further clarification from SEBI, an individual investor can continue holding shares in physical form after 5th December 2018. But cannot process the transfer of shares physically. Thus, it is better to get dematerialization done before any further relative circulars come across in the future.

The reason behind such enforcement of dematerialization of shares is to

    1. Save the investor from fraudulent activities,
    2. Update with the latest corporate actions and
    3. Corporate Actions (like Distribution of Dividends, Bonus, Split & Buyback Proceeds) which might become difficult to communicate to investors in case of an address change or other details.

Opening a demat account & having shares in electronic form is safer than having it in Physical form. But having a myth of insecurity with demat accounts disregard investor from opening one. We try to compile some of the myths which most investor faces:

Some Myths on Dematerialization of Physical Shares

  • I cannot transfers shares to my future generations

Once you dematerialize the shares, it becomes easy to transfer shares from one account to another without going for much paperwork like in the physical shares.

  • My broker will sell my shares without informing me

Earlier these thing happens a lot with traditional brokers, Now you can track all your holding in a DP account. And if it is not in your DP (Depository Participant) then, you can ask your broker to transfer the same from Pool Account to DP.

Furthermore, you’ll receive a quarterly report from NSDL (National Securities Depository Limited) and CDSL (Central Depository Services Limited) on your holding thus saves a lot of time.

  • If I open a demat account then, I have to pay charges annually. And Having Physical shares I don’t have to pay one

You can open an account under BSDA where you don’t have to pay any AMC for holdings up to ₹50,000/-. as  per SEBI guidelines

  • Having physical shares is like having proof of having something in hand, whereas in demat account it’s intangible

Having shares in demat forms also makes you the owner with the same right you had in physical shares. Shares in Electronic form like safe custody were you won’t be a victim of fraud, forgery, theft or tore off of physical shares. All the rights related to Votings Right, Dividend, Bonus/Split, Buyback or any other will be valid.

  • Dematerialization is a costly matter

Dematerialization process cost a very minimal amount which doesn’t put much impact on your pocket. Furthermore, it depends on the broker to the broker for Dematerialization charges which range from ₹15-₹150/script or more.

  • If I open Demat Account, then I have to do trading

Opening a Demat Account doesn’t mean you have to trade. Having a Demat Account is like a Locker Facility in a Bank Account, where you secured all your shares/mutual funds from theft or forgery.

And several other myths, which can be only resolved by asking questions to the stockbroker and the services they offers.

How can I get my Physical Shares Dematerialize?

Dematerialization of physical shares can be done with the help of stockbroker/professionals like us who provide such services. Or if a person wants to do all his own (DIY), then he/she has to contact with the RTA of their respective shares and to the StockBroker to process the same.

Dematerialization process generally takes up to 15 days* depending upon the case. Sometimes, the dematerialization process takes a couple of months or even more, if proper/incomplete documents are provided to the RTA (Registrar & Transfer Agents).

Process of Dematerialization

Following, are the general process of Dematerialization which one can do:

  1. Open a Demat Account with the stockbroker as per your choice.
  2. Take a DRF (Demat Request Form) from the broker.
  3. Fill the DRF Form, along with the attached Aadhar Card, Pan Card, Cancelled Cheque (Original) and Original Share Certificates.
  4. And then submit to the respective stockbroker. He then sends the DRF to the RTA and RTA will revert with the appropriate response within 15 days of receipt of the documents.
  5. Once all the documents validation process is done, the shares will get dematerialized within a couple of weeks.

If you are still facing any issues, in the dematerialization  process, then do connect with us at trade.investitur@gmail.com

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