Sebi eases physical shares' conversion process

If you still hold physical shares of companies, then, here is a sigh of relief for you. Earlier, even if you hadn’t submitted any one of following information like PAN details,  KYC details, contact details, bank account details, specimen signature or for that matter even if nomination details were absent, then, capital market regulator Sebi had authorised registrar to freeze your folio of physical shares. But the market watchdog has decided to give relief to retail investors holding such physical shares. Sebi announced on Friday it will not freeze folios of investors having physical shares lacking any of the above mentioned information or documents.

Sebi had earlier authorised the Registrars and Share Transfer Agents (RTA), to freeze such folios that lacked any one of the requisites mentioned above. But the ordeal remains withdrawn now with immediate effect.

Reportedly, Sebi, got complaints that many such folios were forcefully frozen by relevant authorities. But, now, Sebi has barred authorities from freezing any such folios.

The capital market regulator said, “Based on representations received from the Registrars’ Association of India, feedback from investors, and to mitigate unintended challenges on account of freezing of folios and referring frozen folios to the administering authority under the Benami Transactions (Prohibitions) Act, 1988 and/or Prevention of Money Laundering Act, 2002, it has been decided to do away with the above provisions.”

So now let’s find out how can you convert shares from physical form to demat:

First of all, open a demat account with any DP, i.e., Depository Participant. DP acts as an intermediary between you and any depository. Note that the DP must be registered with SEBI. You can also open a demat account with your bank.

After opening a demat account, send a request for dematerialization.

After filling out the request form, surrender your physical shares to your DP. On every share certificate, write ‘Surrendered for Dematerialization.’

Submit all the necessary documents to your DP.

After this, your DP will send an electronic message to the registrar and transfer agent, i.e., R&T agent.

The R&T agent will be instructed to maintain your record.

After this, a dematerialization registration number will be generated. It will be filled in your dematerialization request form. And it will be sent to the R&T agent along with your original share certificate.

After this, the R&T agent will verify the validity of your submitted documents.

Now the process of replacing your name with your DP’s name will begin.

Along with this, the record of all the shares dematerialized will be credited in your account.

Once this process is complete, an acknowledgement will be generated from the member’s register.

It will be stated that necessary changes have been made. Number has been forwarded to your DP. You can sell or transfer your shares from your demat account as per your wish.