Converting physical shares to Demat is a process of transferring shares held in tangible form to electronic form, allowing investors to hold and trade their shares in a Dematerialized Account (Demat Account). The process is straightforward and can be done in a few simple steps. In this article, we will discuss how to convert physical shares to Demat.
Step 1: Open a demat Account
To convert physical shares to Demat, the first step is to open a Demat Account with a Depository Participant (DP). A DP is a financial intermediary that acts as an agent for the account holder and facilitates the transfer of shares between the account holder and the depository. The DP will provide a Demat Account opening form that needs to be filled out along with the necessary supporting documents such as a copy of the PAN card, AADHAAR card, bank statement, etc.
Step 2: Submit Physical Share Certificates
The next step is to submit the physical share certificates to the DP. The investor needs to sign the certificates and affix revenue stamps, if required, to the share certificates. The investor also needs to provide a letter of authorization, stating that they want to convert the physical shares to Demat. This letter will enable the DP to carry out the conversion process. The DP will verify the authenticity of the physical share certificates and then send them for dematerialization.
Step 3: The Dematerialization Process
The dematerialization process involves converting the physical share certificates into electronic form. The DP will forward the physical share certificates to the Registrar and Transfer Agent (RTA) of the company whose shares are being dematerialized. The RTA will verify the share certificates and update their records to reflect the dematerialization request.
Once the RTA confirms the dematerialization request, the DP will credit the shares to the investor’s Demat Account. The investor will receive a credit confirmation from the DP, which will serve as proof of ownership of the shares in electronic form.
Step 4: Verification and Approval
After the shares are transferred to the investor’s Demat Account, the investor needs to verify that the shares are credited to the correct Demat Account. The investor should also verify that the number of shares credited to the Demat Account matches the number of physical share certificates submitted for dematerialization. The investor should also ensure that the details of the shares such as the company name, ISIN number, and face value are correct.
Once the investor verifies the shares are credited to the Demat Account, they need to approve the shares for trading. The investor can do this by filling out a Delivery Instruction Slip (DIS) and submitting it to the DP. The DIS is a document that authorizes the DP to debit the investor’s Demat Account and transfer the shares to another Demat Account or sell the shares on the stock exchange.
In conclusion, converting physical shares to Demat is a simple process that can be done by following these steps. Converting physical shares to Demat not only provides investors with a secure and convenient way to hold and trade their shares, but also eliminates the risk of loss, theft, or damage to the physical share certificates.
