How to Convert Physical Shares to Demat Online – A Step-By-Step Guide

The Securities and Exchange Board of India (SEBI) mandated in 2019 that all stock market transactions must be conducted electronically. It means that you are unable to trade physical shares. This regulation was imposed by SEBI to facilitate the purchase, sale, and transfer of shares.

If you still have some physical share certificates, you can quickly convert them into dematerialised form. This blog describes a step-by-step guide on how to convert physical shares into Demat.

Understanding the Process of Dematerialisation

The process of dematerialisation involves converting physical shares into Demat. This Demat account holds all of your securities electronically. A depository is in charge of keeping them in an electronic format, which includes bonds, government securities, and mutual fund units.

In compliance with the Depositories Act of 1996, a registered depository participant (DP) oversees these. DPs serve as intermediaries that provide depository services to traders and investors.

Before you know how to convert paper shares to Demat, go through the rules below regarding the conversion:

• By passing a special resolution at the general meeting, a company amends its articles of association, enabling it to issue shares electronically.
• Private companies have to register with both the National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL). The depositories have a set of criteria for registration, to which the issuer should comply.
• Each share is assigned a unique ISIN by the depositories after registration. A 12-digit identifier known as an ISIN is used to identify various instruments, including bonds and shares.
• Companies may have access to bank services only through an intermediary. The issuer must set up Demat connectivity from depositories to transfer the dematerialised shares.

How to Convert Physical Shares to Demat Online?

You can address numerous drawbacks after converting your physical shares to a digital format. It can lower the administrative costs, reduce risks, and ensure convenience. Check the following steps to convert your physical certificates into dematerialised format:

• Step 1: Choose a DP who can act as an intermediary between you and the depository. You can contact financial institutions like banks or online brokerage companies that provide Demat account services.
• Step 2: Fill out the opening form provided by the DP with your name, residential address, mobile number, email ID, and other occupation-related details. You can get this form online or at the DP’s office.
• Step 3: Provide the documents below for verification:
  • Salary slips, bank statements, cancelled cheques, or tax returns for income proof and an active bank account
  • Aadhaar card, passport, PAN card, or driving license for identity proof
  • Utility bills, rental agreements, or ration cards for address proof
  • A gazetted officer or a bank manager will attest to all of your provided documents.
• Step 4: Sign a schedule of charges and an agreement with the DP. This agreement contains details on the rights and obligations of the account user and the DP. The DP staff will confirm the validity and accuracy of the information given through the verification of all submitted papers and account opening forms.
• Step 5: Once the verification is over, the Demat department will assign you a distinct Demat account number and ID. These are essential for online activities, including purchasing, selling, and transferring shares.

What are the Advantages of Converting Physical Shares into Your Demat Account?

Now that you know how to transfer physical shares to Demat account, you should also know the advantages of doing it. These are the advantages of converting physical shares into Demat:

• Convenient transaction

  Since it eliminates the need for a physical visit to the broker, you can manage transactions electronically using a Demat account.

• Nomination facility

  You can nominate an individual to manage your account in your absence. This ensures your transactions run smoothly even if you are unable to do it.

• Safety

  Dematerialisation of securities reduces the chances of loss of securities or misplacement since they are stored in secured depositories.

• Cost-Efficiency

  A Demat account can reduce your expenses since it does not include a lot of paperwork.

• Flexibility

  Using a Demat account, there are no longer any restrictions on the quantity of shares that may be purchased or sold.

Final Thoughts

Understanding how to convert physical shares into Demat helps you avoid paying unnecessary charges for paperwork, and also follows the guidelines of SEBI. A lot of individuals think that the procedure of changing physical shares into Demat is difficult. However, the procedure is easy enough to finish in two to three weeks. Investors would benefit from greater convenience when the shares are dematerialised.

Download the application of PL Capital Group – Prabhudas Lilladher to open a Demat account for free. By opening a Demat account with PL, you can easily convert your physical shares into Demat format.

Frequently Asked Questions

1. How much time does it take to convert physical shares into Demat?

The overall duration of converting physical shares into Demat accounts depends on each broker. On average, it takes only one or two weeks to complete the whole procedure.

2. Does converting physical shares to Demat incur any fees?

Yes, you have to pay a nominal fee for converting your physical share certificates into digital format. You have to pay INR 150 to INR 400 per share certificate with 18% GST. However, it may vary according to DP’s policy.

3. Does converting physical shares to Demat need a Demat account?

Yes, you have to open a Demat account to convert physical shares into electronic form. This account will hold all your securities electronically.

4. Without changing them to Demat, is it possible for me to sell my physical shares?

No, before you can sell the shares, you must first convert your physical share certificates into an electronic format.