Opening up Demat Account to get good returns

If you are holding any shares in physical form, you may need to convert them into Demat (dematerialization) for selling them on any stock exchange in India. You must have a Demat account in any of the two depositories, namely NSDL or CDSL to convert your physical shares into Demat mode. Converting shares from physical mode to Demat mode has many advantages with demat account charges.

  1. No fear of loss or theft as they are stored in electrical form and maintained in the book entry form.
  2. No possibility of bad delivery, missing in transit, forgery, and manipulation.
  3. Quick settlement times result in faster payment receipts for the seller of shares and quicker credit of shares for buyers.
  4. Need to change personal details like address, bank details, and email id only with the depository participant where the Demat account is held. In physical shares, one must update details with each company separately with trading.

Before opting to convert physical share certificates into Demat mode, one must have a Demat account with any of the depository participants, Known as DP. Only eligible securities with valid ISIN numbers are suitable for conversion into Demat. Moreover, the concerned company must have a valid agreement with the Depository and shares must be available for conversion into Demat mode. The name in physical securities and the Demat account should be the same. If the version is of joint holders, the sequence of names should be the same in both physical shares certificates and in the demat account. Minor variations like short initials in the place of the first name or in the middle name and little spelling mistakes are allowed. Anyhow, the signatures available with Depository participants must match those on Dematerialisation Request Form (DRF) with demat account charges.

Separate DRFs should be submitted if they consist of free and locked securities. Separate DRF is required for separate ISIN and deposits of various paid-up values. One should ensure that Dematerialisation Request Form is signed by all the concerned.

DRF should be obtained and submitted to the concerned Depository Participant after filling in all required information like Certificate Numbers, Face Value, and Distinctive numbers of shares. Attach original certificates with DRF and ensure they are mutilated and defaced to avoid manipulation. Also, ensure that “Surrendered for Dematerialisation” is written or stamped on the face of the certificate. It is advisable to have photocopies or scanned copies of the certificates for future reference. Depository Participant Id and beneficiary Owner Id should be endorsed on certificates while submitting for demat account charges.

If everything is in order, the Depository Participant will send DRF along with original certificates to the company’s issuer, Registrar, and Transfer Agent. After verifying details, the issuer or RTA informs the Depository for credit of shares to the Demat account of the holder. If there are any observations or deficiencies, depository participants will be informed which need rectified within 15 days. If comments are not remedied within 15 days, the issuer or RTA returns certificates to Depository Participants. DP returns the same to the client with trading.

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