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Digitisation of Physical Shares: How You Can Do It?

Shweta 
on 20 January 2021

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Holding of shares simply means holding a share in the ownership of the company whose shares the shareholder owns. Many people engage in this activity of buying and selling shares as it is very profitable. The whole procedure of buying and selling is very strategic. It is a high risk - high reward process given that you act at the right time. Many people end up holding shares for this reason. Most of the people own shares in digital or electronic form these days, but there are also a lot of people, especially senior citizen who still own and
hold their shares in physical form.

What are Physical Shares?

Physical shares are shares which the shareholders hold in physical form. Holding a share in physical form basically means that the documents that prove the ownership, purchase and existence of those exist in paper, means physical form. Today, there are many people who still hold these even though the holding of shares has started in digital form as well. Digital form of shares is way efficient because you can manage all your shares, buy or sell more and that too from anywhere digitally. Knowing all the advantages, people are now wanting to transfer their physical shares to digital form but they are finding the whole procedure difficult to understand. So, let’s discuss it.

Digitisation of Physical Shares: How You Can Do It

How to Get Your Shares Dematerialised?

Dematerialisation is the first step in the process transferring the ownership of shares through electronic or digital means. Dematerialisation simply means converting the physical shares into digitised form. It can only be done by the shareholders of those physical shares. For this, you’ll have to verify that the shares are truly yours and also to confirm what shares you want to get converted into digitised form. To verify your ownership, you’ll have to show the certificates of ownership of the physical shares you want to get transformed. They’re needed because they have all the details which are required for the verification, so it’s a good thing to properly preserve those certificates until you need them for some useful times like these.

An investor who wants to dematerialise his/her shares needs to have an account with a DP (Depository Participant). The investor has to surrender the certificates registered in his/her name to the DP. After intimating the NSDL (National Securities Depository Limited) electronically, the DP sends the shares to the concerned respective issuer or R&T (Registrar & Transfer) agent in charge. The NSDL in turn informs the issuer or R&T agent electronically using NSDL Depository system about the request for dematerialisation of the shares. If the issuer or R&T agent finds the certificates in correct order required, it registers NSDL as the holder of the shares and then communicates to NSDL the confirmation of the request made electronically. On receiving such confirmation, NSDL credits the shares in the depository account of the investor with the DP.

I. The owner will submit a request to the DP through the Dematerialisation Request Form (DRF) for the dematerialisation of the physical shares, along with the certificates of shares that are to be dematerialized. Before submission, the investor has to deface the certificates he/she owns by writing 'SURRENDERED FOR DEMATERIALISATION'.

 

II. The DP will verify the application form for correct details along with the number of shares and their respective certificates and also the security type of the shares (equity, preferential, debenture, etc.) are given in the DRF. If the details and share count are verified correctly, then the DP issues an acknowledgement slip duly signed and stamped, to the client or investor. It is possible that the issuer or the R&T
may reject the dematerialisation request in some cases. In that case, the issuer or the concerned R&T Agent will send an objection memo to the DP, with or without DRF and the share certificates depending upon the reason for rejection. The DP or the investor must remove reasons for objection in 15 days after receiving the objection memo. If the objections are not removed within 15 days, the issuer or the
R&T Agent may have to reject the request and return DRF accompanying with all the certificates to the DP. The DP may generate a new dematerialisation request and send the shares again to the issuer or the R&T Agent if the investor wants to give it another try. No fresh request for the same shares can be made until the issuer or its R&T Agent have rejected the previous request and informed the NSDL and DP about it.

 

And by following this procedure, you can get your share dematerialised and properly get your physical shares converted into digital ones after which the certificates will be destroyed so that the shares are no longer existing in the physical form.


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