Demat of Shares

What is Demat of Shares?

Demat of shares is the conversion of physical share certificates into an electronic form, which is held in a Demat Account. The shares, when held in physical form, were prone to loss, theft, or damage, and the transfer process was cumbersome. With the dematerialization process, shares are held in electronic form, making the management of shares more efficient, secure, and faster.

Benefits of Demat of Shares:

1. Safety and Security:
   • Since shares are held electronically, the risk of loss, theft, or damage of physical certificates is eliminated.
2. Convenience:
   • Shareholders can easily buy, sell, and transfer shares without the need for physical paperwork, which streamlines the trading process.
3. Quick Transfers:
   • The transfer of shares in electronic form is faster compared to physical shares, enabling quicker settlement of trades.
4. No Stamp Duty:
   • Transfers of dematerialized shares do not require stamp duty payment, unlike physical transfers.
5. Reduced Paperwork:
   • The need for managing physical certificates and keeping track of paperwork is significantly reduced.
6. Easy Portfolio Management:
   • Investors can easily track their shares, dividends, and other investments in their Demat account, providing a clear overview of their holdings.

How to Demat Shares?

1. Open a Demat Account:
   • To dematerialize shares, an investor needs to open a Demat Account with a Depository Participant (DP), which can be a bank, brokerage firm, or a financial institution.
   • You will need to provide identification proof, address proof, and PAN card details to open a Demat account.
2. Submit Physical Shares:
   • Once the Demat account is opened, submit your physical share certificates to the DP along with the Dematerialization Request Form (DRF).
   • The DP will verify the documents and initiate the dematerialization process.
3. Verification and Conversion:
   • The DP will send the physical share certificates to the Depository (NSDL or CDSL), which will verify the details and convert them into electronic form.
   • After verification, the shares will be credited to your Demat account.
4. Receive Electronic Shares:
   • Once the shares are dematerialized, they will be available in your Demat account in electronic form, and you can view and manage them online.

Documents Required for Demat of Shares:

1. Demat Account Opening Form:
   • Form provided by the Depository Participant to open the Demat account.
2. Physical Share Certificates:
   • Original share certificates that need to be dematerialized.
3. Dematerialization Request Form (DRF):
   • A form to request the conversion of physical shares into electronic form.
4. Proof of Identity and Address:
   • PAN card, Aadhar card, passport, or any government-issued identification for identity verification.
   • Utility bills, bank statement, or any address proof.
5. Photographs:
   • Passport-size photographs of the account holder(s).

Charges for Demat of Shares:

• Account Opening Fee:
  • Some Depository Participants charge a one-time fee for opening a Demat account.
• Annual Maintenance Fee (AMC):
  • There is usually a nominal annual fee for maintaining the Demat account.
• Dematerialization Charges:
  • A fee is charged per share certificate to convert physical shares into electronic form.
• Transaction Fees:
  • Some DPs charge fees for transactions (buying/selling) of shares, including the conversion of physical shares.