If you have just come across your long lost physical share certificates lying in a cupboard, read this before you rejoice. From 2019, as per the mandate of market regulator Securities and Exchange Board of India (SEBI), only shares in the electronic format can be sold or transferred at the stock markets. It does not mean you cannot hold shares in the physical form, just that you cannot sell or transfer them.
To trade your paper shares, you have to first convert them into a dematerialised form. Dematerialisation is the process of converting physical shares of a company into electronic format. Shares are converted into dematerialised form and held in a new demat account. But do keep in mind that you can convert only shares of a company that is active and trading on the exchange. So, if the shares are already delisted from the stock exchange, you may have missed the bus – those shares are now worth only the paper they are printed on.
But if the company is still trading, here is a complete step-by-step process to convert those physical shares into demat form.
1) Open a demat account
# You can open a demat account with any depository participant – a stockbroker who links between an investor and a depository – by submitting KYC documents, like address proof and identity proof (PAN card, Aadhar card, passport, etc), along with a photo and account opening form.
# Several depository participants, including banks, stock brokerages or private and government companies which offer demat account opening services. Some companies also allow the opening of demat accounts online upon submission of scanned copies of KYC documents.
# Keep in mind that the demat account will have to be opened in the names of all shareholders, in case the shares are jointly held. Further, the order of holding (first and second) in the new account will have to be exactly the same as that of
physical shares.
2) Surrender paper shares along with DRF form
# Once your demat account is opened, you can place a request for conversion of your physical share certificates into dematerialised format.
# You have to surrender your paper shares to the demat company along with a Dematerialisation Request Form. Use separate forms for shares of different companies.
# You should also remember to deface each paper share by mentioning ‘Surrendered for Dematerialisation’ on every physical share certificate. You will get an acknowledgment slip for your surrendered shares.
# Once the request is approved after verification, your physical shares are destroyed and you will get the dematerialised shares in your demat account.
Congratulations, you can now sell or transfer your demat shares and realise their value.
