How to Convert Physical Shares Into Demat Form in India: Step-by-Step Guide

Click Here – Get Free Investment Predictions

Why You Should Dematerialize Physical Shares Immediately

SEBI's regulations make it mandatory to hold shares in demat form for trading on exchanges. You cannot sell physical share certificates directly on BSE or NSE; you must first dematerialize physical shares and convert them into electronic holdings in your demat account. Holding physical share certificates also carries risks: certificates can be lost, damaged, forged or stolen.

There is no cost to the investor from the issuer company or RTA to dematerialize physical shares, though your DP may charge a nominal demat request processing fee. Given the risks of physical holding and the zero or minimal cost to convert them, converting all physical certificates to electronic form at the earliest is strongly advisable.

Step-by-Step Process to Dematerialize Physical Shares

Follow these steps to dematerialize physical shares.

1. Open a demat account: You must have an active demat account with a SEBI-registered DP before you can dematerialize physical shares. If you do not have one, open one first using the Aadhaar-based eKYC process.
2. Obtain the Demat Request Form (DRF): Collect the DRF from your DP's branch or download it from your broker's website. The DRF is the primary form used to dematerialize physical shares.
3. Deface the physical certificates: Write 'SURRENDERED FOR DEMATERIALISATION' on each physical share certificate. This prevents them from being used for any other purpose.
4. Submit DRF and certificates to your DP: Submit the completed DRF along with the defaced physical certificates to your DP's nearest branch or send via registered post.
5. DP generates a Demat Request Number (DRN): Your DP assigns a DRN and forwards the certificates to the company's Registrar and Transfer Agent (RTA). Keep the DRN for tracking.
6. RTA verification: The RTA verifies the authenticity of the certificates. If the certificates are genuine, the RTA informs CDSL or NSDL to credit the equivalent quantity to your demat account.
7. Credit to demat account: Within 15 to 30 working days of submission, the electronic shares appear in your demat account. Check your demat account statement to confirm the credit.

Documents Required to convert them

The documents required to dematerialize physical shares include: the original physical share certificates (defaced with the required marking), the completed Demat Request Form (DRF), a self-attested photocopy of your PAN, a self-attested copy of your identity proof and your demat account details (DP ID and Client ID).

If the physical share certificate has a name that does not exactly match the name in your demat account (for example, due to a change in name after marriage), you will need to first apply for a name correction through the RTA before you can dematerialize physical shares. Minor mismatches such as spelling differences may also cause rejection.

Use the Univest Stock Screener to Find Quality Stocks

Common Reasons Physical Shares Are Rejected During Dematerialisation

Not every attempt to convert them succeeds on the first submission. The RTA may reject the request if the certificates are damaged, mutilated or have signatures that do not match the company's records. Rejection also occurs if the ISIN for the security is suspended, the company has been delisted, or the certificates have already been dematerialised.

If your request to convert them is rejected, your DP will return the certificates with a rejection note specifying the reason. Address the rejection reason (for example, apply for a duplicate certificate from the company or rectify the signature mismatch through the RTA) before resubmitting.

What Happens to Dividends and Corporate Actions on Physical Shares?

While your request to convert them is being processed, any dividends or corporate actions from the issuer company will be sent to the registered postal address on the company's records (not to your demat account). Once you successfully convert them and they are credited to your demat account, all future corporate actions will be processed electronically.

If you receive a dividend cheque or a rights offer during the dematerialisation process, ensure the cheque is deposited promptly and the rights application is submitted on time, since the company may not know to route these to your demat account until the process to convert them is fully complete.

Dematerialising Physical Shares Through Univest

Univest is a SEBI-registered platform (SEBI RA Reg. No. INH000013776) linked to CDSL. If you want to convert them through a Univest demat account, contact Univest's customer support at univest.in for the current process and any applicable DP charges for the dematerialisation request. The DRF form is available from Univest or directly from CDSL's website.

Ensure that the name on the physical share certificate matches the name on your Univest demat account. If there is a mismatch, the attempt to convert them will be rejected by the RTA and you will need to rectify the discrepancy before resubmitting.

Conclusion

To convert them is the most important step you can take if you are still holding paper share certificates. The process to convert them is straightforward, takes 15 to 30 working days and involves minimal cost to the investor. Do not delay: physical certificates carry significant risks of loss, damage and forgery that disappear the moment you successfully convert them and convert them into secure electronic holdings in your demat account.

Download the Univest iOS App or Univest Android App to open your demat account and track your portfolio.

Frequently Asked Questions

How do I dematerialize physical shares?

Ans. To convert them, open a demat account with a SEBI-registered DP, obtain a Demat Request Form (DRF) from your DP, deface the physical certificates with the required marking, submit the DRF and certificates to your DP, and wait 15 to 30 working days for the RTA to verify and credit the shares to your demat account.

How long does it take to dematerialize physical shares?

Ans. It typically takes 15 to 30 working days to convert them after your DP submits the Demat Request Form (DRF) to the company's RTA. If the certificates have a discrepancy or are rejected by the RTA, the timeline to convert them will be longer as you will need to resolve the issue and resubmit.

What is a Demat Request Form (DRF)?

Ans. The Demat Request Form (DRF) is the primary form submitted to your DP when you want to convert them. The DRF contains your demat account details, the ISIN and quantity of shares being submitted for dematerialisation, and your signature. The DRF is submitted along with the defaced physical share certificates.

Can I dematerialize physical shares if the company is delisted?

Ans. Generally, you cannot convert them of a company that has been delisted from all exchanges, as there is no active RTA to process the request. For delisted companies, you may need to contact the company directly or the relevant regulatory authority. For active listed companies, even those delisted from one exchange, you can convert them normally.

What if my name on the physical share certificate does not match my demat account?

Ans. If the name on your physical share certificate does not match your demat account, the attempt to convert them will be rejected. You need to first apply to the company's RTA for a name rectification on the share certificate, then resubmit the corrected certificate with the DRF to convert them.

Is there any charge to convert them?

Ans. The issuer company and RTA do not charge for the dematerialisation process. However, your DP may charge a nominal processing fee for each demat request. The overall cost to convert them is very low compared to the security risks of holding physical certificates. Check your DP's fee schedule for the exact charge.