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