How to Convert Physical Shares to Demat Account?

Converting a physical share to a Demat account involves the process of paper-to-electronic conversions known as Dematerialisation. The actual certificates are deposited with the Depository Participant, who converts your paper certificates into digital records credited to your Demat account. This conversion is essential for trading securities, as the Securities and Exchange Board of India (SEBI) mandates holding shares in Demat form for all market transactions. This article explains how to convert physical shares to Demat. 

Steps to Convert Physical Shares into Demat Shares 

The process to convert physical shares to Demat form involves a systematic process that ensures secure transfer of ownership: 

Step 1: Open a Demat Account 

Open a Demat account with a SEBI-registered Depository Participant such as a bank or financial institution. This account functions as digital repository for holding shares electronically. 

Step 2: Complete the Dematerialisation Request Form 

Obtain a Dematerialisation Request Form (DRF) from Depository Participant. Fill in accurate details of physical share certificates, including company name, ISIN number, and certificate numbers. 

Step 3: Submit Physical Share Certificates 

Attach the original physical certificates along with the completed DRF. Write "Surrendered for Dematerialisation" across each certificate to indicate the conversion request. 

Step 4: Verification Process 

The Depository Participant will verify the submitted details and forward the Dematerialisation request to the company's registrar for authentication and processing. 

Step 5: Credit to Your Demat Account 

Once the registrar approves your request, your shares are converted into electronic format and credited to your Demat account for future transactions. 

Why Convert Physical Shares into Demat Form? 

Converting physical share certificates to Demat form offers numerous advantages for modern investors: 

• Compulsory Requirement: SEBI has made it mandatory to hold and trade shares in Demat form; thus, conversion has become compulsory for all market transactions. 
   
• Safety and Security: Physical share certificates help prevent theft, loss, damage, and counterfeiting. Demat accounts also require special credentials, so only investor and their authorised persons can access holdings. 
   
• Easy Access: Monitor and manage share portfolio online from any geographical location at any time without physical visits to the broker's office. 
   
• Easy Transactions: Buying and selling in no time with no paperwork involved. Thus, enabling fast, convenient electronic trading via online infrastructure. 

Documents Required to Convert Physical Shares to Demat 

The following documents are required for the completion of the conversion process: 

• Address Proof: Provide copies of valid address proof documents, such as utility bills, rental agreement, ration card, bank passbook, or passport. 
   
• Proof of Bank Account: You need to provide proof of your bank account details through a cancelled cheque or a three-month statement of your bank account. 
   
• Identity Proof: Provide valid identity proof documents, which include Aadhaar Card, PAN Card, voter's ID, passport, or driver's license. 
   
• Photographs: Attach a few passport-sized photographs along with the documents. 

Once Demat account is opened, investors can submit the Dematerialisation request forms along with the original share certificates for conversion. 

Common Challenges with Transferring Physical Shares to Demat 

Investors may face several challenges during the conversion process: 

• Mismatched Signature: The signature in the request conversion form differs from what the registrar of the company has in the files; the solution is to update your signature with the registrar before submitting the request for conversion. 
   
• Torn Share Certificates: Damaged or torn paper share certificates require replacement before conversion. Contact the company to surrender the damaged certificates and obtain duplicate replacements. 
   
• Incomplete Documentation: Missing or incorrect documentation while opening your Demat account or registering a conversion request leads to unnecessary delays in conversion. The form should be correctly filled out and supported with all documents necessary, including original certificates.  
   
• Delayed Processing: The usual time required for the regular conversion process is about 21 to 25 days, and sometimes even longer. Investors can contact their Depository Participant to obtain updates if they experience excessive processing time. 

Conclusion 

Converting a physical share certificate to Demat form enhances security, enables convenient access, and ensures compliance with SEBI regulations. The process involves opening a Demat account, submitting Dematerialisation forms with original certificates, and completing verification. Understanding this conversion empowers investors to manage their holdings efficiently and participate effectively in securities trading through a reliable trading app.