Dematerialization Of Shares
Dematerialization of shares is the conversion of physical shares and securities into electronic records stored in a Demat account with a Depository Participant (DP), under the oversight of depositories like NSDL or CDSL in India.
Benefits of Dematerialization:
- Safe, convenient, and efficient holding of securities.
- Eliminates risks associated with physical certificates.
- Faster transaction settlements and easy monitoring.
- Reduction in paperwork and administrative costs.
Step-by-Step Procedure for Dematerialization of Shares:
Open a Demat Account: The shareholder must open a demat account with a SEBI-registered Depository Participant (DP). Both NSDL and CDSL are recognized depositories in India.
Obtain and Fill the Dematerialization Request Form (DRF): Get the DRF from your DP, fill it accurately, and mention ‘Surrendered for Dematerialization’ on each physical share certificate.
Submit Documents: Submit the duly filled DRF, original share certificates, and requisite KYC documents such as PAN, Aadhaar, address proof, to your DP.
DP verification: The DP verifies the details on the DRF and the share certificates. If there are discrepancies (e.g. mismatch in names, joint holding sequence), additional documents like affidavits, marriage certificates, or transposition forms may be needed.
Forwarding to Company/RTA: The DP sends the dematerialization request electronically to the depository (NSDL/CDSL) and physically forwards the share certificates and documents to the company’s Registrar and Transfer Agent (RTA).
RTA/Company Verification: The company or RTA verifies the request and authenticity of submitted certificates and authorizes dematerialization.
Credit of Shares: On successful verification, the dematerialized shares are credited to the shareholder’s demat account. The physical share certificates are destroyed, and the shareholder receives a confirmation from the DP.
Key Documents Required:
- Original share certificates
- PAN card (self-attested copy)
- Aadhaar card or other government-issued address proof
- Any additional documents (e.g., affidavit, marriage certificate, transposition form) if there are discrepancies or joint holdings
Timelines and Charges:
- The process usually takes 15–30 days after submission to the DP.