Procedure for Conversion of Physical Shares to DEMAT | Convert Physical Shares To Demat | Enterslice
The concept of dematerialization was introduced through the Depositories Act 1996. However, it gained momentum in 2018 after the notification of SEBI dated 28.03.2018 banning the transfer of shares in physical form by the companies irrespective of them being listed, delisted or unlisted except in the case of transmission of shares, which came into effect from 1st April 2019.
What is the Need for Conversion of #Physical #Shares to DEMAT?
The need for conversion of physical shares to#DEMAT is due to the drawbacks of the physical shares, which are • The need to keep the physical share certificates securely due to the risk of theft, destruction or misplacement of the same • The time-consuming transactions in case of physical share certificate which can be completed quickly with the help of Demat account.
What are the documents required for the Conversion of Physical shares to DEMAT?
The following documents are required for the conversion of physical shares to DEMAT.
• Identity proof such as Aadhar Card, PAN Card, voter id, driving licence etc
• Residence proof such as lease deed or rent agreement, electricity or telephone bills
• The passbook or bank statement is not older than 3 months.
• Original copy of the physical share certificate,
• It must be noted that the share certificate must be in good condition in terms of legibility and otherwise.
• Request form filled in the prescribed manner. The applicant is required to fill out separate forms in case of holding shares of different companies.
• The applicant must ensure to deface each page of the share certificate by mentioning Surrendered for Dematerialization.
• Acknowledgement slip in respect of the surrender of shares
What is the Process of Conversion of Physical shares to the DEMAT account?
The process of conversion of physical shares to DEMAT can be broadly classified into 2 Stages
• Opening of DEMAT Account and
• Request for Dematerialization of Shares
Opening a beneficiary account with a Depository Participant (DP)
The first step for converting physical shares to DEMAT is opening an account with a depository participant duly registered with SEBI. The depository participant acts as an intermediary between the shareholder and the depository. The Demat account can be opened by completing the following steps.
Filing the application form for opening of DEMAT Account –
The applicant is required to fill out the application form with the Depository Participant in the prescribed manner.
Providing the essential documents for KYC Verification
The next step is the submission of the necessary documentation for the opening of the account.
Signing an agreement with the depository participant
After providing the essential documents, the applicant must sign the agreement with the DP, along with the payment of requisite charges. The agreement comprises the duties of both the parties, the applicant and the depository agent.
Verification of Documents by the Depository Participant
The depository participant shall verify the documents submitted by the applicant to check the adequacy and accuracy of the documents.
Issue of Demat Account Number
Upon the depository’s successful verification of the documents, the participant’s application for the opening of an account shall be approved, and the applicant shall be provided with a unique Demat account no. for the conversion of physical shares to DEMAT.
Surrender of Physical Share Certificate
Upon successfully opening the DEMAT account, the next step is surrendering the physical share certificate.
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