Have You Converted All Your Physical Shares Into Demat Form?

Physical shares are shares that are paper based share certificates that were issued to you when you purchased shares of a company. In 1996, Demat shares were launched in India. Demat shares are shares that are virtual in nature. They are electronic paperless shares.

There were many reasons to launch Demat shares -

·       Reduce fraud and forgery due to IPO scams and fake shares being printed

·       Eliminate bad delivery or loss of physical shares

·       Reduction in paperwork both for investors and companies

·       Decreased costs of transaction

Though companies are now allowed to issue shares only in Demat form, there are many shareholders who have the physical share certificates that they had purchased when they were available. SEBI issued a notification this year stating that with effect from 5th December 2018, all physical shares held by investors will be considered illiquid. They will not be valid which means people cannot buy/sell shares that are in physical format. So shareholders have to convert them into dematerialised form if they need to preserve their wealth and to transfer or sell them.

How does one convert Physical shares to Demat form -

·       Open a Demat account with any Depository Participant that is registered with NSDL or CSDL.

·       Complete the Demat Request Form (DRF) and submit it along with original physical share certificates. You might be asked for other documentation too like PAN Card copy. If you have lost/ misplaced the physical share certificates, you can file an FIR and contact the company/ company's Registrar and Transfer Agent (RTA) to get duplicate physical share certificates.

·       The share certificates are verified with the company registrar, depository and other relevant parties.

·       Upon confirmation of the validity of the share certificates, shares are allocated to the Demat account of the investor. The physical certificates are then considered invalid. As an investor, you might want to keep a copy of the share certificates till the Demat shares are credited to your account.

·       Check your account if the right shares and the right number of units are credited. The whole process takes from about 2-4 weeks.

If the company whose shares you have does not have an ISIN number and is not listed on any exchange, you will not be able to convert them to Demat shares.

As a prudent investor, ensure that you review your financial papers/files to check if you have physical shares. Check with your parents/grandparents/siblings if they have physical shares. Ensure to convert all of them to Demat mode. This will help you find forgotten investments and also make sure the investments are relevant and you can use them in the interest of your financial life.