A share certificate is a physical document that represents ownership in a publicly traded company. However, in today’s digital age, it is becoming increasingly common for investors to hold their shares in a dematerialized, or “demat,” form. It indicates holding shares electronically in an account with a Depository Participant (DP), rather than as physical certificates.
A Demat account provides several benefits such as easy transfer of shares, easy to sell shares, easy to pledge shares as collateral for loans and also allows for easy tracking of shares and their value.
How it Works?
It’s important to note that when you convert your share certificates to a demat form, you will not receive new certificates. Instead, the shares will be credited to your demat account and can be sold, transferred or used as collateral for loans.
Converting share certificates to a demat form involves a series of simple steps you need to follow. Here’s an overview of the process:
Step 1: Open a Demat Account
In order to convert your share certificates to a demat form, you will first need to open a demat account with a DP. A DP is typically a bank, broker, or financial institution that is authorized by the National Securities Depository Limited (NSDL) or the Central Depository Services Limited (CDSL) to offer demat services. You can open a demat account by visiting the website of a DP or by visiting a branch in person.
Step 2: Submit Required Documents
The second step involves submitting certain documents, such as proof of identity and proof of address. The specific documents required may vary depending on the DP. Hence, it is advised that you check their official website or ask a representative for more information. Make sure you submit all documents mentioned on the website or as advised by a professional to avoid any inconvenience or rejection.
Step 3: Fill out the Opening Form for Demat Account
Once you have gathered all the required documents, it is time to fill out the demat account opening form. This form will typically ask for information such as your personal details, details of the shares you wish to convert, and your bank account details. Be careful while mentioning the details. Any error may lead to rejection.
Step 4: Submit the Share Certificates
Submit your share certificates to the DP. You can do this by mailing the certificates to the office of DP or by delivering them in person to a branch.
Step 5: Wait for the Shares to be De-materialized
After the DP receives your share certificates, they will process them and update your demat account with the corresponding number of shares. This process can take several days or weeks, depending on the DP.
Step 6: Track the Status
You can track the status of your share certificate conversion by logging into your demat account online.
Some companies offering services for opening a Demat account may charge a nominal fee for dematerialization of shares. This fee can be waived or reduced if the shares are held in large quantities. The service can save you from hassles of doing it all on your own and time.
Converting share certificates to a demat form is a simple process involving opening of a demat account with a DP, submitting the required documents, filling out the demat account opening form, submitting the share certificates, and waiting for the shares to be dematerialized. By converting to a demat form, investors can enjoy the convenience of electronic holding of shares and a host of other benefits.