How to Convert Physical Shares to Demat Form

What Does It Mean to Convert Physical Shares into Demat Form?

Dematerialisation is the process of converting physical share certificates into electronic securities which are held in a Demat account. It's a change in the way the shares are held, not a change in ownership.

For instance if you have 100 shares of a company in physical certificates then successful dematisation will result in those shares being credited to your demat account.

Electronic holdings are far easier to track and transfer via the relevant securities market processes. Not every old certificate is automatically eligible for conversion though. The company and the securities in question must meet the appropriate requirements.

Step 1: Open a Demat Account

If you don't already have one, open up a Demat account with a registered Depository Participant (DP). A DP can be a stockbroker, a bank or another depository participant (e.g. NSDL or CDSL).

You'll normally be required to complete the requisite KYC and provide documentation such as your PAN, identity proof and bank details.

Before you go any further, confirm that the Demat account has the same names as the physical share certificates and that the holdings are in the same pattern. With joint holdings the order of the names can be important.

Step 2: Check Your Share Certificates

Look at the certificates before you submit them. Check the company name, number of shares, the names of the holders and the certificate details. Make sure the company and its securities are eligible for demat.

If the certificates have spelling variations, mismatched signatures or any other discrepancies then get in touch with the company's Registrar and Transfer Agent (RTA) or your DP to find out how to deal with them.

If the original shareholder has died then it will involve the transmission of the securities and the requisite documentation prior to demat being able to be completed.

Step 3: Fill Out the Dematerialisation Request Form

Ask your DP for a Dematerialisation Request Form (DRF). Complete it with all the requisite details (including the security details and your Demat account details).

Check each entry carefully and sign the form as required. If you hold a range of securities you may need to make separate requests for different securities or different ISINs. Securities which are subject to a lock-in may also require separate treatment.

Keep a copy of the form and the acknowledgement for your records.

Step 4: Submit the Original Certificates

Submit the completed DRF together with the original physical share certificates to your DP in accordance with its submission procedure.

The DP checks the details and routes the request via the depository system to the issuing company or its RTA. The company or RTA then checks the request and confirms whether the securities can be demat'd.

Hold onto your acknowledgement until the process is complete. If the request is rejected then the DP or RTA should state what the issue is.

Step 5: Check Your Demat Account

Once the request has been approved the relevant securities are credited to your Demat account. Check your holdings statement to ensure that the company name and quantity are exactly as the certificates you submitted.

The time taken to process will vary depending on the requirements in question and whether the documents are in order. CDSL's Investor Charter specifies a seven day timeframe for dematerialisation from the date the DP receives the requisite documentation. Further time may be required if there are any discrepancies or if further action is needed.

What If You Have Old or Inherited Shares?

Old certificates may well require further checks, particularly where the company has changed its name, merged with another company or otherwise undergone a corporate change. Where the registered holder has passed away you will of course first need to complete the transmission with the company or RTA.

Don't toss damaged certificates and don't assume that a certificate is of no value just because it's old. Get in touch with the RTA or your DP to confirm the status and to find out what documents you'll need.

Final Thoughts

Converting your physical shares into Demat form will make it far easier to hold and manage your investments. The process involves opening a Demat account (of course), verifying your certificates, submitting the DRF and the original certificates and then confirming the credit once the DRF has been approved.

Before you start check the requirements with your DP and the company's RTA (particularly if the certificates are old, jointly held or inherited).