In the stock market, only the shares lying in the demat account can be sold, transferred. As per the rules of the Central Government, an Indian citizen cannot trade in physical share certificates. The investor has to convert the physical share certificate into dematerialized (demat) format or electronic format. The Securities and Exchange Board of India (Sebi) has notified earlier. This will help the investors to ease the process of buying, selling and transferring the shares of the company.
In the year 2019, market regulator SEBI had issued an order to sell or transfer shares in physical form only after converting them into demat. Let us know how to convert physical shares into demat account.
Here is the whole process
The first step to convert physical shares into demat form is to open a demat account. The investor has to approach the Depository Participant (AZ) for Dematerialization Request Form (DRF). Then the investor has to fill the DRF with the required details correctly and sign it.
After filling the DRF, send it to the DP along with the physical share certificates. While sending the DRF, the investor has to mention ‘surrendered for dematerialisation’ on the physical share certificates. Only after the investor surrenders the physical share certificates for dematerialization, the DP will start processing the request.
Your request will then be forwarded by the DP to the Registrar and Share Transfer Agent (RTA) appointed by the company. Thereafter, the dematerialization request will be approved and the physical share certificates will be destroyed. With this, the exact number of shares will be credited in the demat account of the investor.
Which shares can be converted
Keep in mind that you can transfer only those shares to the demat account whose shares of the company are active and they are being traded on the exchange. If the company’s shares have been delisted from the exchange, then these physical shares are just junk for you.
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Shehnaz is a Corporate Communications Expert by profession and writer by Passion. She has experience of many years in the same. Her educational background in Mass communication has given her a broad base from which to approach many topics. She enjoys writing about Public relations, Corporate communications, travel, entrepreneurship, insurance, and finance among others.