How to Convert Physical Shares into Demat Form?

It has been decades since the share market started in India in 1875 with the establishment of BSE (Bombay Stock Exchange). During these times, investors visited the broker's office to buy or sell shares and securities. As proof of their buying/selling, they used to receive a physical share certificate. 

If you own these physical shares, this is the time to convert them into digital format. Wondering how to convert physical shares into demat form? This blog is here to help you with all the details. Let's dive deep and decode the process to convert the physical shares into demat.  

What does Physical Shares into Demat Mean? 

In 2000, the National Stock Exchange (NSE) opened an online trading system. SEBI (Securities and Exchanges Board of India), the share market regulatory body, announced that after 1 April 2019, no one will be able to buy physical shares. The complete scenario has been changed.  

SEBI instructed the traders to convert the existing physical shares into the digital format and receive them into an online demat account. In order to transfer the physical shares to demat format, shares must be dematerialized.  

‍What is a Demat Account & Dematerialization? 

A Demat account, also known as a dematerialized account, is an electronic form of digitally holding shares and other securities to trade shares conveniently in the stock market. 

Dematerialization is a process of transferring paper-form securities into electronic form to smooth the process of buying, selling, transferring and holding shares.  

‍Want to Convert Physical Share to Demat. Create a Demat account today!

Benefits of Converting Physical Shares to Demat

The transfer of physical shares to demat offers several advantages to traders. Here, we have listed the top 5 benefits of converting physical shares to demat. 

1. Security 

Managing physical share certificates is challenging. With physical shares, there is always a threat of loss, forged, misplaced, or theft. With the electronic format of shares, these problems get eliminated.

2. Convenience 

With demat stocks, you can conveniently trade and invest. For the settlement of shares, you won’t need to depend on brokers or need to visit their offices any more. 

3. Accessibility

Another benefit of converting physical shares to digital format is the accessibility. The converted digital stock is accessible with your mobile phone. You can download an online trading app, open your demat account, and manage the stocks online from anywhere, anytime. 

4. Easy Fund Transfer

You can easily transfer the electronic shares funds into your linked bank account. With it, you can conveniently buy/sell a single share per market benefits and needs and the amount credited to your bank. 

5. Monitoring 

In demat format, you can monitor your share when the market increases. You can consider selling or buying the share to make a profit. In addition, If all of your shares are in digital format, you can efficiently manage your portfolio and make it more diversified. 

Things You Must Know to Convert Physical Shares into Demat Account

• The name mentioned in the share certificate and demat account should be the same. If the name doesn't match you’ll need to submit a gazette letter or an affidavit with government stamp paper for transfer of shares into demat format. 
• A single holder share certificates can’t be dematerialised into a joint demat account. 
• There is Rs. 150 charge for the dematerialization of each share certificate excluding the courier charge and + 18% GST.
• Jointly held physical shares can only be dematerialised in the joint demat account. For joint physical share transfer, the demat account holder's name must be in the same sequence as the names on the share certificates. If not, then a transposition form needs to be submitted. 
• The physical share can be converted only if the company name is listed with depositories. 
• The transfer of physical shares in demat is subject to RTA (Registrar and Transfer agents) verification. 

What is the Process of Converting Physical Shares to Demat? 

1. Visit the BSE India Website

The first step for transferring physical shares to demat is to visit http://bseindia.com/index.html and verify the share’s certificate. To validate you will need to enter the company name or ISIN. If the face value on the certificate does not match the current face, you must contact the Registrar and Transfer Agents (RTA) to get the updated certificate. 

2. Open an Demat Account

After verifying the physical certificate, a crucial step for the dematerialization process is to open a demat account with a Depository Participant (DP). DP is an intermediary between you and the depositor. The DP must be registered with SEBI. The Depository Participant can be bank, online brokerage platforms, and professional brokers. While opening an account ensure that name in physical share must match with the DP. Additionally, if you have a joint account, ensure you open a joint demat account following the same name sequence. GoPocket is one of the leading online brokerage platforms that help in simplifying the transfer process of physical shares. 

3. Fill out Dematerialisation Request Form (DRF)

Now, request that your Depository Participant provide the dematerialisation request form PDF. Fill out this form by following the instructions. While filling the DRF, you’ll require demat account number, physical share certificate details etc. You must know: 

• Only one DRF form is applicable for one company. 
• If you have 3 different dates’ physical share certificates for the same company you can submit 1 DRF certificate itself. ( in 1 DRF form we can mention up to 3 shares)
• For two different companies' physical certificates, you will need to submit two DRF for each company. 
• The DRF should be signed in the signature with DP (as per GoPocket’s records) and Signature with RTA/Issuer/Co. (as per the company records) fields. In the case of a joint account, both holders need to sign.

4. Submit Documents to Depository Participant 

After filling the DRF form, arrange the documents together: 

• Dematerialisation request form (DRF)
• Self attested Address proof, if the address has been changed both new and old address need to be submitted
• Original Share Certificates, you’ll need to mention the phrase ‘Surrendered for Dematerialisation’ on each share certificate
• Self attested pan card 

Now, courier the documents to: 

GoPocket

Mayflower Valencia,

3rd Floor, Office No 3, 

Nava India,

Avinashi Road,

Coimbatore- 641004

Before dispatching the hard copy, you can send the soft copy at support@gopocket.in to verify and confirm the documents.

5. RTA will Verify the Document 

As soon as the documents reach us, we’ll get them verified by the Registrar and Transfer (R&T) agent. The agent will check the authenticity of the documents and complete the dematerialization process. Usually the verification process takes up to 25 days. Once the documents are verified, the converted shares will reflect in your demat account. 

In the electric form, you can manage shares online. 

Want to Convert Physical Share to Demat. Create a Demat account today!

How to Transfer / Claim a Physical Share Certificate of a Deceased Shareholder?

If you have a physical share certificate of a deceased family member and want to convert into demat. You will first need to get a name changed on those certificates to become the legal owner of the share certificate. For it, the foremost step is to check whether a single person or more than one person owns the shares. In joint holding, shares will get transferred in the name of the other joint holder. On the other hand, if the shares are in the single name, the shares will get transferred in the name of the nominee.
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Procedure to Change Name on Share Certificate of a Deceased

• Initially, check the legal status of a company. Whether the company still exists or has been named, changed, taken over, under liquidation, or merged with another company.
• Afterwards, submit a written application for a name change to the Registrar and Transfer Agent or the company's share department.
• Joint holders, if any, should sign a request letter.
• After examining the documents, a company will issue a physical share certificate in the name of (nominee, joint holder, legal heir)

If the shareholders and the nominee are deceased, the shareholder's blood relations or successor can transfer the physical shares by submitting the required documents to the Registrar and Transfer Agent.

• The requisition letter was duly signed by the applicant for the issue of the entitlement letter.
• Form ISR-5 was duly filled in and signed along with the necessary proofs duly self-attested with the date.
• Copy of the Death Certificate of the deceased shareholder duly attested by the Notary Public.
• Copy of Probate of Will / Succession Certificate / Letter of Administration / Court Decree obtained by Competent Court duly attested by the Notary Public.
• Affidavit on Rs.100/- non-judicial stamp paper and attested by the Notary Public as per the enclosed format.
• The original share certificate(s) face value of Rs.1/- each is to be enclosed.
• Form ISR-2 was duly filled in, signed, and attested by the bankers for signature confirmation.
• Self-attested copy of PAN card and address proof of the applicant.
• The original cancelled cheque leaf duly mentioned the claimant's name/banker's attested copy of the passbook in the claimant's name.
• Client Master List (CML) of the claimant duly sealed and signed by your depository participant to credit the shares to your demat account.

What is the Deadline for Converting Physical Shares to Demat?

As per the news report on business standards, the deadline for converting physical shares to demat is 30 September 2024 for all private companies other than small companies. However, the investors are independent in keeping physical share certificates. However, maintaining shares in demat format is recommended to leverage the benefits of the stock market more efficiently. 

Conclusion 

Physical shares certificates are the receipt of your purchased shares that reflect your ownership of a specified number of company shares. When there was no internet, traders used to get physical certificates. Today, it's rarely issued. Investors keep the shares in electronic format for easy management. However, if you own a physical share and want to convert it into a demat form, you can create your demat account and submit the documents for the RTA verification through a broker. 

Gopocket is an online brokerage platform, a digital face of Skyrocket, that provides the service of dematerialization. With us, you can conveniently convert your physical shares into demat form. You can courier documents to us or visit our offices in your area. 

FAQs

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1. How do you cash physical shares?

You can cash your physical shares after dematerialization. You'll first need to convert your physical shares into digital format. Then, you can transfer or sell the share to get the amount in your demat-linked bank account. 

2. Can I still convert physical shares into demat?

Yes, you can convert your physical shares into demat. However, you'll need to request for dematerialization. Dematerialization can be a lengthy process. A broker can help simplify the process for you. 

3. How long does it take to convert physical shares to Demat?

To convert a physical share to a Demat, one must have a demat account, obtain a Dematerialization Request Form (DPR) from a Depository Participant (DP), submit it with a physical share certificate and required documents for verification, and wait for the verification to happen in 2 to 4 weeks. The Physical share will be reflected in your demat account.