As technology and digitisation have advanced, the practice of changing physical shares to demat has grown in popularity. We will go over the fundamentals of share conversion as well as the detailed procedure for converting physical shares to demat in this blog article.
What is a Demat Account?
Prior to commencing the conversion procedure, let us clarify the definition of a demat account. An electronic way to keep securities like government securities, bonds, mutual funds, and stocks is through a demat account. It makes it possible for investors to purchase, trade, and hold shares without the requirement for paper share certificates. In India, having a demat account is now required in order to trade stocks, according to the Securities and Exchange Board of India.
Why Convert Physical Shares to Demat?
Converting physical shares to dematerialised shares has various benefits. Among these are a few of these:
1. Convenience: You may store all of your securities in one location and save the trouble of keeping actual certificates when you have a Demat account.
2. Time and Cost-Efficiency: Since there is no need for the actual transfer of certificates, the process of purchasing and selling shares is substantially quicker and less expensive when using demat accounts.
3. Safety and Security: It is simple for physical share certificates to be misplaced, stolen, or damaged. Securities are stored electronically and protected from these hazards when they are kept in demat accounts.
4. Online Trading: With a variety of platforms and applications, investors can trade online using Demat accounts.
The Process to Convert Physical Shares into Electronic Form
If you own physical share certificates, you cannot claim ownership of the shares because SEBI has mandated that physical shares be converted to demat. You can use the instructions on how to convert physical shares into demat to accomplish this. Below are the steps to convert physical shares into Demat form: -
Opening a Demat Account
An investor or trader must open a demat account with a DP who is registered with Central Depository Services Limited (CDSL) or the National Securities Depository Limited (NSDL).
Submitting Physical Certificates
Getting a Demat Request Form (DRF) and presenting the actual share certificates to the DP is the next step. The investor's demat account information, the securities that need to be dematerialised, and other pertinent data are all included in the DRF.
Verification
The verification procedure starts as soon as the depository participant receives the investors' completed dematerialisation request form. After confirming the physical certificates, the DP sends them to the business's registrar for additional confirmation.
Cancellation
The physical certificates are canceled by the registrar after verification. They are no longer a means for the investors to assert ownership.
Credit
The organisation credits the investor's demat account with the electronic shares as soon as the registrar cancels the hard copy share certificates.
Documents Needed to Convert Physical Share Certificate to Demat
1. Identification documents containing a photo, like your driver's license, voter ID card, PAN , Aadhaar card, etc.
2. Present proof of where you live, such as signed leases, driver's licenses, passports, landline and power bills, maintenance invoices for your flat (if relevant), copies of your insurance, gas bills, etc.
3. The evidence of your bank account, like the bank's passbook or account statement (not more than three months old).
4. The valid copy of the stock certificates you actually own. The information on the share certificates must be visible and in good condition.
5. Completed and submitted the Dematerialization Request Form. It is imperative that you utilise distinct forms for shares belonging to varied organisations. Two different forms will be filled out for each firm, for instance, if you own five shares of XYZ and five shares of PQR.
6. The words "Surrendered for Dematerialisation" must be written on each paper share in the physical share certificates. Recall to obtain an acknowledgement form for the shares that you have turned in.
Points to Remember
1. The duration of the conversion procedure varies based on the R&T agent's verification process, ranging from 15 days to one month.
2. Converting physical shares to demat may come with a price from certain businesses. It is advisable to inquire about any type of fees with your DP or R&T agency.
3. It is possible to combine physical shares from several businesses into a single demat account.
4. Partially held physical shares cannot be converted. Before conversion, shares that are fewer than one will be combined with other certificates.
The Bottom Line
Any individual wishing to trade in the stock market must convert their physical shares to demat, which offers many advantages. We hope that this blog post has helped you gain a better understanding of the significance of having a Demat account and the conversion process. To ensure a hassle-free converting process, pick a reputable DP and carefully follow the instructions.
