How do I convert physical shares into a Demat account?

According to the SEBI notification of 8 June 2018, SEBI aims for 100% Dematerialisation of shares by the target date of 5 Dec 2018. All existing shares must be dematerialized by SEBI on or before 5/12/2018. Transfer of physical shares after 5 December 2018 will be prohibited, except for share certificates that are subject to a legal will.

This step-by-step guide will show you how to convert physical shares into Demat.

Shareholders who hold share certificates in physical form can convert their shares quickly into dematerialized form by following the simple steps below.

Step 1_ Opening a Demat account

This is the most important and essential step to convert share certificates to dematerialized form. To hold your shares/shares, you will need to have a Demat account.

Below are the steps to open a Demat account

1. 1.Contact a registered SEBI Depository Participant
2. 2. Fill out the account opening form
3. 3.Submit your KYC documents and a completed application form to your DP
4. With the bank/DP, sign an agreement and a schedule detailing all charges. The agreement will outline the rights and responsibilities of the account user as well as the DP.
5. The number of your Demat account will be given to you. This number can be used to start trading on the stock market with your Demat account.

2nd Step: Transferring physical shares into form

1. For a Dematerialization Request Formula (also known as a DRF form), contact your DP
2. 2.) Fill out the DRF form, and send it to your DP with your share certificates. (On each share certification, the 'Surrendered For Dematerialisation' must be mentioned.
3. After successful verification of the DRF submission and authentication of your share certificate, you will receive an electronic demand. Your physical shares will then be converted into dematerialized form and transferred to your Demat account within two to three weeks

Step 3 - Dispose of Physical Share Certificates

You can now destroy the physical shares certificates as they are no longer needed to be protected

Demat forms allow you to sell and transfer shares quickly, unlike physical certificates.

The disadvantages of using a physical share certificate for trading of shares

Below are some of the drawbacks to trading or holding shares with physical share certificates:

    1. Physical share certificates should be kept safe and secure under lock and key. They are at risk of being stolen and lost. Share certificates may also be damaged by wear and tear.
    2. Transactions with a physical share certificate can be time-consuming and tedious, and require multiple steps. However, transactions in Dematerialized form can be done in seconds.
    3. Any transaction involving physical share certificate attracts stamp duty payments whereas share transaction using dematerialised shares do not attract any stamp duty payment/liability/expenses

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