How To Convert Physical Shares Certificate Into Demat Form?

The Securities and Exchange Board of India (SEBI) has long insisted that all physical shares be converted to the digital format. This initiative aims to expedite and streamline the settlement process, eliminate fraud committed by share transfer agents, and pose challenges for shell companies dealing with the electronic mode.

Now, SEBI has cracked the whip. SEBI argues that electronic bookkeeping will bring transparency to the capital markets. The tax authorities will find it easier to track shareholders and identify the real beneficiaries. Keep in mind that the lack of transparency has been bothering the government for quite some time. If you still have physical share certificates, it is time to convert physical shares to demat now. This can be done easily in a matter of two to three weeks.

How to convert physical shares into demat

Here is a step-by-step guide on how to convert physical shares into demat.

1. Open a beneficiary account with a Depository Participant (DP): The first step is to open a demat account with a DP. A DP is an intermediary between you and the depositor. The DP is necessarily registered with SEBI. You could open a demat account even with your bank, which can also function as a DP. Ensure that the names in the demat account and the physical share certificates match.

2. Fill out the request form: Fill out a dematerialisation request form once your demat account is opened. Take your physical shares with you and surrender them to your DP while filling out the form. Do not forget to write ‘Surrendered for dematerialisation’ on every share certificate.

3. Submit documents: Once you submit all the documents, your DP will send an electronic email or SMSmessage to the Registrar and Transfer (R&T) agent. The R&T agents have been entrusted with the job of maintaining your records.

4. Dematerialisation registration: A dematerialisation registration number will be generated. This will be fed into your dematerialisation request form and sent to the T&R agent with your original share certificates.

5. Validity check: The T&R agent will check the authenticity of the documents you have submitted.

6. Name change: The process to replace your name with your DP’s name begins now. Also, the number of shares getting dematerialised will be recorded in the Register of Members’ account. The Register of Members is the repository that stores the details of the shareholders.

7. Acknowledgement: Once this process is completed, an acknowledgement is generated from the Register of Members saying the requisite changes have been made. The number will be forwarded to your DP.

8. Shares credited: Your dematerialised shares will get credited into your demat account.

Conclusion

The market watchdog believes that electronic bookkeeping is far easier and reduces the risk of forgery. Moreover, it will boost investor confidence and bring much-needed transparency into the securities market. So, this is the right time to open your demat account. Many people believe that converting physical shares into demat is a cumbersome process. But that is not true. The process is fairly simple and can be completed within two to three weeks. Once the shares are dematerialised, it would result in more convenience for the investors. The buying and selling of shares could then be done in seconds. The demat form also guards against any physical damage to the shares.

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