What is Dematerialization?
Dematerialization is the process of converting physical share certificates, mutual fund, bonds or any other financial instrument into electronic form. An Investor who needs to dematerialize his/her shares needs to open a demat account with Depository Participant (DP) registered with NSDL and /or CDSL. Typically – stock brokers.
These physical shares are then submitted by the investor and in return he gets electronic shares in his demat account. Click here to know – how to open trading / demat account. Once your demat account is active, you will fill a request form and submit it to your DP. The shares are then credited to your demat account in electronic form within 15 days.
Detailed Procedure for Dematerialization of Shares
- To convert the physical shares into demat form; investor needs to submit a request to the DP in the Dematerialization Request Form (DRF), along with the certificates of securities to be dematerialized. Before submission, on each certificate, mention the words: “SURRENDERED FOR DEMATERIALISATION”.
- The DP needs to process this request along with the share certificates and forward DRF and Share Certificates to the company’s Registrars.
- Once the request is approved, a confirmation of dematerialization will be sent to the NSDL/CDSL.
- Post this, a credit in the holding of shares will reflect in the investor’s account electronically.
How to Dematerialize Shares of Companies Which Get De-Listed, Merged, De-Merged, Suspended
Delisted Shares cannot get dematerialized
Many investors have in their portfolio shares of companies that have delisted from the stock exchanges. The stock exchanges have made its mandatory for such companies to accept share buy-back requests for at least one year after delisting of shares. But after one year, investors can do nothing with their delisted shares held in physical form. They however remain shareholders and are entitled to receive all dividends and bonus / rights shares issued by the company.
Companies which are Suspended
Suspended companies shares can get dematerialize by following the above process.
Merger, Demerger or Split of Company
In case the company gets merged, de-merged or does a share split, investors need not surrender the old certificates as they stand cancelled. In such cases, companies must have issued new share certificates to the existing shareholders in their records. You need to provide new share certificate for the purpose of dematerialization. In case you have not received your new share certificates, please contact the company or preferably their registrars.
Company has changed its Name
Often companies change their names and this can confuse shareholders. So before sending the demat request for such shares, one must check the new name of the company. In such cases, one needs to submit the new share certificates which the company has issued. Again, in case you have not received your new share certificates, please contact the company or preferably their registrars.
Private/ Public Company’s Shares
A private/ public limited company can also opt to get its shares dematerialized. Typically, this will be done only in cases where there are many shareholders in the company and where the company wants to give ease of transferability to its shareholders.
What makes the process of dematerialization of shares complicated is the way in which the share certificates are held (ownership), which, in turn, determines the ease or difficulty of the demat process.
A couple having shares certificates of companies, some in their individual names and some jointly held.
To transfer the share certificates into your demat account, name, its order and the type of ownership of the demat account should match with your share certificate. Thus, to transfer jointly held share certificates, you are required to open a new joint demat account to get the jointly-held shares credited into it.
Note – Jointly-owned shares can be transferred to a jointly held-demat account even if the sequence of the holders’ name in the certificates is different. For example – if husband is the first holder in the demat account but second holder in some of the share certificates, then those shares can be transferred to this account by submitting Transposition Request Form (TRF), along with the Demat Request Form (DRF) and the share certificates to the DP.
LOOKING FOR A FINANCIAL ADVISOR? WANT TO OPEN A PMS ACCOUNT? FILL IN YOUR DETAILS BELOW
To Discuss Investment options across Stocks, Mutual Fund and PMS Schemes. Leave your Whatsapp message @ 9833905054 or Email at [email protected]
SEBI Registered Investment Advisor INA100004608
By Guruprasad on
Sir I have 400 shares of Zim Laboratories Ltd listed on BSE. I have certificates of OTC exchange, since these were purchased in 1994. please guide me how to dematerialise these certificates
By Rajat Sharma on Author
call your broker.
By M V Reetu Venkata Padmini on
Sir, my mother have 100 shares in Times Guaranty Limited, listed on BSE. The physical certificates are there with us which were purchased on 11th October 1994. We have tried for DEMAT once through Religare securities limited but it was rejected by them with the cause that they were old shares. Kindly guide me how to dematerialise these old shares.
Thanking you.
By Rajat Sharma on Author
Reach out to your broke and ompany registrars please – for issuance of new certificates
By Anjali Sharma on
`Hi,
Pls help me understand if I should hold an account in the bank where I wish to open my demat account?
And also clarify, if I should approach any share brokers/Commodity brokers to open my demat account?
By Pranav Mishra on
My mother along with my grandmother jointly hold 200 shares of ITC Ltd. We applied for demat of the said shares, but now the rejected our application stating that my grandmother’s signature did not match with that in their record. They want the signatures to be verified by a banker. Unfortunately recently my grandmother was diagnosed for having Alzheimer disease and is not in a position to sign infront of the banker. Is there any other alternative to get those shares dematerialised. My mother is the first holder and grandmother the second.
Regards