To keep a check on fraudulent transactions, Securities Exchange Board of India (SEBI) has notified that there will be no transfer of physical shares after December 5, 2018. For transfer of shares, it will be mandatory for you to hold shares in a Demat form. It is a welcome move as companies have often complained that investors holding physical shares at times do not get dividend income due to change in their address. Holding shares in a demat form will help them complete the corporate action. Also Read - Full Lockdown in Kerala From Today: State Govt Relaxes Guidelines For Banks, Financial Services
Vikash Jain, co-founder at Share Samadhan says, “This may be a big problem for pending transfer cases in physical form. One can still hold the share in physical form but cannot transfer post December to anyone unless it gets dematerialized.” Also Read - Axis Bank, Promoter United India Insurance Settle Cases of Alleged Disclosure Lapses with Sebi
How to convert physical shares into demat form
Vikash Jain explains how to covert physical shares into demat form Also Read - Individuals, Corporates Won’t Be Allowed to Use Cryptocurrencies As Govt Plans Own Digital Currency: Report
- A shareholder can get his shares dematerialized by submitting a Dematerialization Request Form (DRF) to its Depository Participant(DP). A DP is usually an intermediary between a shareholder and the Depository i.e. NSDl & CDSL.
- After submission of DRF, a demat request is raised by DP with a unique DRN (Demat Request Number) and the physical share certificates are sent for verification to the concerned authorities (RTA).
- Upon verification from RTA, the DP team will convert all the physical share certificates into electronic form. It takes approximately 3-4 weeks for the DP team to convert physical shares into Demat Form or electronic form.
- In case of death of a shareholder before converting shares into demat mode, legal heirs will have to transmit the shares in their name and then get the dematerialization done in their respective names. However if shares are in joint names and one of the joint holder is deceased, the process of Transmission cum demat can be carried out by submitting a single form to DP.
- In case of loss of physical shares, the shareholder will have to get the duplicate share certificates issued in his name from the Company. After receiving the duplicate share certificates, the shareholder can get his shares dematerialized by filling the DRF. Demat request can be fulfilled only for the companies which are having active ISIN.