Dematerialisation of Shares

Dematerialisation of Shares – An Overview

The process of converting physical share certificates into electronic form to ease trading and transfer and facilitate safe and efficient management is called dematerialisation of shares. Dematerialised shares are stored in a Demat account, allowing investors to hold, trade, and manage the shares electronically.

The process of dematerialisation of shares terminates risks such as loss, theft, or damage during share trading. Overall, dematerialisation leads to a more structured and reliable share trading. Initially, dematerialisation was mandatory for public companies, but now, even private companies are required to follow this process.

All private limited companies, except small ones, need to convert physical shares to Demat.

Do you have a desire to convert physical shares to demat? Talk to professionals at Investorlink for a timely and effortless conversion.

Last Date for Dematerialisation of Physical Shares

The deadline for the dematerialisation of physical shares depends on the company's financial year-end-

• March 31 Year-End- Last Date: September 30, 2024 (18 Months Later)
• December 31 Year-End- Last Date: June 30, 2025 (18 Months Later)

What is the Need for Dematerialisation of Shares?

The dematerialisation of shares is an important step aimed at boosting the efficiency, security and transparency of the securities market. Dematerialisation ensures the overcoming of risks associated with the physical copy of the share certificate.

A share certificate in physical form is prone to risks, including loss, theft and damage caused by environmental factors, such as water, fire and wear-tear. However, electronic shares are immune to such physical risks, offering more security by safeguarding digital documents against potential threats. Conversion of shares into electronic form streamlines the trading process and reduces administrative costs.

Who Can Claim Dematerialisation of Shares?

Dematerialisation of shares can be claimed by anyone who holds a physical share certificate. It includes individual shareholders, joint holders, companies, and investors of public and private companies. These individuals and entities can request to convert their physical shares into a Demat form. Private and public companies that convert physical shares into electronic form leverage simplified management and hassle-free trading.

Joint holders and their legal heirs, who inherit the shares from deceased shareholders, can also dematerialise them. Dematerialisation of shares benefits the shareholders who are willing to streamline their holdings.

Dematerialisation of Shares with our Expert Agents

Dematerialisation of shares is the conversion of physical shares to demat. The overall process is complicated. However, our expert agents ensure a hassle-free process and seamless transition of physical shares to demat. Our agents have the expertise and experience to guide you through every step of the process, from choosing a Depository Participant (DP) to submitting relevant documents and meeting other compliance requirements.

At Investorlink, we facilitate adherence to the regulatory requirements, avoiding errors that could lead to transitional delays. We can help you securely convert physical shares to demat. You can access your digital shares to leverage a quick and efficient transaction process with minimal risk and inconvenience.

Why is the Dematerialisation of Shares Required?

Dematerialisation of shares is required to:

1. Eliminate the risk of loss, theft, forgery, and damage
2. Simplify trading via electronic buying, selling and transferring
3. Quick turnaround time for processing and settlements
4. Reduces costs incurred on paperwork, stamp duty and handling
5. Boosts security to avert fraud and encourage a transparent process
6. Dividend and bonus benefits are credited automatically
7. Obligatory compliance mandated by SEBI and MCA for companies
8. Makes portfolio management and investment tracking easy
9. Lowers burden by reducing paperwork and simplifying record-keeping
10. Boosts efficiency and accessibility of share trading

What are the Benefits of Dematerialisation of Shares?

Dematerialisation of shares is important to ensure secure, efficient and risk-free trading. While it offers various benefits to the shareholders, some of the key benefits are listed below:

1. Demat accounts make buying, selling, and managing share trading electronically from anywhere easy and convenient. It eliminates the need to be physically present at the broker's office.
2. With the linking of the Demat account with the shareholder's bank account, funds can be transferred electronically, eliminating the need for manual transactions.
3. Converting physical shares to demat facilitates a safe and secure environment, protecting shares from theft or physical loss.
4. The nomination feature in a demat account allows the assigned nominee to operate the account in your absence, paving the way for smooth management.
5. Demat accounts facilitate paperless trading, eliminating the need for heavy document work. It also serves as a time saviour.

Documents Required to File Dematerialisation of Shares

Dematerialisation of shares is the process of converting physical shares to electronic form and requires the following documents to be submitted:

1. Dematerialisation Request Form (DRF) to initiate the process
2. Physical share certificates that need to be dematerialised
3. Proof of Identity – PAN card or passport
4. Proof of Address – Aadhar card or latest utility bills
5. Two recently clicked passport-sized photographs
6. Bank Account Statement – To receive dividends
7. Covering Letter – Requesting dematerialisation of shares
8. Transmission Form – If shares are inherited or transferred
9. Death Certificate – To validate the deceased status for inherited shares
10. Succession Certificate/Will – Proof of legal inheritance rights

Use WhatsApp to ease the documentation for the dematerialisation of shares.

How to Convert your Physical Shares into Demat Form?

Given below is the stepwise guide to convert your physical shares into Demat form with Investorlink-

Penalties for Non-dematerialisation of Shares

Given below are the penalties applicable for the non-dematerialisation of shares-

Restriction on Securities- The company cannot allot, issue, or buy back shares, including bonus shares.

Monetary Penalties- The company faces a fine of INR 10,000 plus 1,000 per day (up to INR 2,00,000)

Penalties for Officers- Defaulting officers face the same fines, with a maximum of INR 50,000.

Speak to our advisors at Investorlink and get rid of penalties and fines.

MCA Rule 9B- Dematerialisation of Shares of Private Companies

Fees for Dematerialisation of Shares

The dematerialisation of shares comprises various fees, including account opening charges, transaction fees, and annual maintenance fees. It also includes the professional fees of the consultants if you avail of their services. Usually, fees for converting physical shares into demat start from Rs 150 per share certificate. For further details, talk to our experts today.

Timeline for Dematerialisation of Shares

The timeline to complete the dematerialisation of shares is given below:

Selection of Depository Participant (DP) – Choosing a depository partner, that is, the financial institution or brokerage firm, with which the Demat account has to be opened takes 1 to 2 days.

Filling & Submitting the Demat Account Form – Completing and submitting the application form along with the relevant documents for verification takes 1 to 2 days to complete.

Document Verification – Document verification, including address, identity and bank detail verification, takes 3 to 5 days.

Processing Dematerialisation Request – Once the documents are verified, the application takes 5 to 7 days to proceed further.

Completion of Demat Account Opening – The opening and activation of the Demat account with shares being converted into electronic form and credited to the account takes 7 to 10 days.

Investorlink Service Offerings for Dematerialisation of Shares

Investorlink offers comprehensive dematerialisation of shares services, facilitating a seamless transition from physical to electronic form. The list of services that we offer includes the following:

1. Initial dematerialisation consultation to understand your requirements
2. Assistance with choosing a Depository Participant (DP) for your Demat account
3. Helping you fill out and submit the dematerialisation form and documents
4. Offering assistance with document verification to ensure their validity
5. Guidance with submission of physical share certificates for dematerialisation
6. Facilitating the dematerialisation request with the Depository Participant
7. Keeping you updated on the status of your dematerialisation request
8. Monitoring the account to ensure timely processing and troubleshooting
9. Offering support to convert physical shares to demat
10. Ensuring your shares are successfully credited to your Demat account

FAQs on Dematerialisation of Shares