Physical shares can be dematerialized if they bear the company name and nominal value. To verify your physical share certificate, visit bseindia.com and enter your company name or ISIN code. If the denomination on the certificate does not match the current face value, customers should contact their Registration and Transfer Agents (RTAs) to obtain an updated certificate. This step is necessary to ensure that the share document is valid and up-to-date before the dematerialization process begins.
Charges for conversion of physical shares into demat form
The cost of converting physical shares into electronic form includes various fees that an investor must take into account:
Brokerage fees: Brokers may charge fees for their services related to the processing of a dematerialization application. These fees can vary significantly, so investors should inquire about them in advance.
Annual maintenance fee: Banks and brokerage firms usually charge an annual maintenance fee ranging from ₹200 to ₹850. This fee is for maintaining the investor’s demat account.
Transaction fees: These fees vary by broker and include fees for each trade made when converting shares.
Dematerialization fees: The cost of converting physical shares ranges from approx ₹150 to ₹400 per share certificate.
Often, the entire process can be managed online, which is a convenient option for investors. As per SEBI guidelines, the conversion process should be completed within 21 days; however, for some companies this process may take longer. Investors should take potential delays into account and factor them into their plans.
In order to dematerialize physical share documents, the following documents must be submitted:
Dematerialization Application Form (DRF): For a maximum of four share certificates from the same company, two copies of the DRF are required. If the share certificates appear in sequence (e.g. 1505101, 1505102, 1505103), two DRF forms are sufficient even in the case of more than four certificates.
DRF Annex: If the share certificates are not in order, two DRF forms and an annex DRF must be submitted.
If you have share documents of more than one company, separate sets of DRFs and DRF attachments should be prepared for each company. This ensures correct and polished dematerialization of physical shares between different companies. The original share certificates must be submitted with the DRF. A photocopy may be kept for reference purposes.
Apart from these, you must also attach KYC documents including address proof and a self-attested copy of your PAN card.
Upload and conversion process:
To dematerialize physical shares, a shareholder must submit the share documents along with Dematerialization Request Forms (DRF) and Know Your Customer (KYC) documents to his/her broker. The broker will then forward the tradable shares and documents to the registrar and transfer agent who will convert the shares into electronic form. It will take up to 25 days for the RTA to complete the dematerialization process.
Once the physical share certificates are converted, they will appear in the shareholder’s demat account. This process allows shares to be electronically stored and managed for greater efficiency and security.
Converting physical shares to a demat account offers several benefits beyond the ability to trade physical shares:
Security: Holding securities in a demat account is a safe and sound and convenient method. Eliminates the risks associated with physical certificates such as damage, loss, counterfeiting and theft. Only authorized users can access their demat accounts.
Straightforward accessibility: The digital format allows you to buy and sell shares without the need to visit a brokerage office. You can easily access your demat account online to monitor your portfolio, access account statements and transfer securities.
Credit Facilities: Financial institutions offer secured loans based on the value of the shares in your demat account, giving you additional financial flexibility.
International trade facilities: Demat accounts enable investors, especially non-resident Indians (NRIs), to trade on Indian stock exchanges from abroad. They can simply log into their accounts to buy or sell shares of the company.
Nominations: In case of untimely death of the investor, the shares in the demat account can be transferred to the designated beneficiary, ensuring a polished transfer of wealth.
Frequently asked questions
How to check physical share certificates before dematerialization?
You can visit the BSE India website and enter your company name or ISIN code to verify the validity of your physical share certificates.
What documents do I need to present for dematerialization?
You need to submit Dematerialization Request Form (DRF), DRF Annexure (if applicable), Know Your Customer (KYC) documents (such as address proof and self-attested copy of PAN card) and original physical share certificates.
What is the process of converting physical shares to demat?
Submit your share certificates, DRF and KYC documents to your broker. The broker will then forward your documents and certificates to the registrar and transfer agent (RTA), who will convert them into electronic form.
How long does the dematerialization process take?
As per SEBI guidelines, the process should be completed within 21 days. However, for some companies it may take longer.
What fees are involved in the conversion process?
Fees may include brokerage fees, annual maintenance fees ( ₹200 to ₹850), transaction fees and dematerialization fees (approx ₹150 to ₹400 per share).
Can I convert shares of different companies at the same time?
Yes, but you will need to provide separate sets of DRFs and attachments for each company.
Posted: Apr 29, 2024 10:42 pm EST
