How to convert physical shares into demat? | Value Research Here we tell you the step-by-step process to convert your physical shares into demat form

How to convert physical shares into demat?

Here we tell you the step-by-step process to convert your physical shares into demat form

Let's say your grandparent bought shares in a company 30 years ago and you recently found them. The shares have grown a lot and you just became a millionaire. But there is one thing, the shares are in physical form, i.e., you only have physical share certificates. You're upset that you may never be able to sell those shares, but what if there is a way? Although the demat form of shares is the most common these days, there are some cases like this where people hold physical shares. Today in this article, we are going to look at the simple steps to converting physical shares into demat form.

Steps to convert physical shares into demat shares:

  • Open a demat account with a DP (depository participant). A DP is an intermediary between you and depository firms such as CDSL or NDSL, and is registered with SEBI. Zerodha is a depository participant. Even banks such as ICICI, HDFC, SBI, etc., are DPs and you can open a demat account with them if it is easy for you to access.
  • Once you have opened a demat account, request a DRF (dematerialisation request form) from your DP and fill it out. Submit the form with your DP along with the share certificates and any other necessary documents, if required. Do not forget to write 'Surrendered for dematerialisation' on each physical share certificate.
  • The DP will then verify the document submitted and send a DRN (dematerialisation registration number) while processing.
  • After verification, the DP will send a request to the registrar and share transfer agent of the company in which you hold physical shares. They will once again verify the authenticity of the share certificates.
  • Once the verification has been completed, the physical shares will be destroyed and your demat account will be credited with the company's shares.

Taking an example, if you are opening a demat account with Zerodha or have a demat account with Zerodha, you can refer to the steps here to get the DRF, where to send the form and certificate and any other documents required.

Why is dematerialisation good?
Prior to 1997, shares were held in physical form. It was highly vulnerable to fraud and there were constant security concerns. Since the shares were in physical form, there were also concerns about storage and maintenance. Transferring of shares took time and there was a risk of losing certificates in transit. Physical certificates were also counterfeited sometimes.

Dematerialisation of shares solved all these issues. Shares were transferred digitally and the worry about authenticity is not there since each demat share is authenticated by ISIN. Concerns regarding storage and maintenance of shares were also eliminated.

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