Overview of Dematerialization of Shares
Dematerialisation is the process by which physical certificates of an investor are convert to an equivalent number of securities in electronic form and credited into the BO’s account with his DP.
The process of converting physical share certificates of a company into electronic form is known as demonetisation of shares. Then these shares are deposit in an online Demet account that you opened with an online broker.
To trade in the current stock market, it is important to sell or transfer shares from one account to another in an online Demat account.
In 1991, the process of demitorizing shares has been started, and before physical formats were use which were challenging to maintain over time. With the implementation of demarction, the process of purchasing and selling shares becomes easier and smooth.
The process of dematerialization of securities
The share dematerialization process is quite simple and easy to understand. Also, it takes just a few days to complete. Here’s a brief explanation about the process of dematerialization of shares.
First, you’re require to open a Demat account with a depository via a depository participant (DP). Generally, the stockbroker with whom you have a trading account also doubles as a DP.
Once you’ve opened a Demat account, you’ll have to submit a duly-filled Dematerialization Request Form (DRF) to your DP, along with the physical share certificates that you own.
If you own shares of multiple companies, then you’ll have to submit a duly-filled DRF for each company along with the relevant share certificates.
Upon receiving the DRF, your DP will scrutinize both the form as well as the securities to ensure that everything is in order.
Once the DP is satisfie with your request, you will receive a Dematerialization Request Number (DRN) as an acknowledgment.
The DP then forwards your request to the Registrar and Share Transfer Agent (RTA) of the company.
Once the RTA of the company accepts your dematerialization request, the physical share certificates are convert to the electronic mode and are subsequently destroye.
And finally, the now dematerialized shares are credite to your Demat account, which you can subsequently either sell or transfer to other accounts.
Eligibility criteria for Dematerialization of Shares in India
Following is what constitutes the eligibility criteria to dematerialize the shares:
- The share distribution should not be dispute.
- The application should be file on time.
Documents required to obtain an Dematerialization of Shares
The following information & documents are require for the dematerialization of shares:
- Certificate of incorporation
- Director IDs
- Physical copies of the shares
- Memorandum of Association
FAQs About Dematerialization of Shares?
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