Day: July 12, 2012

This post is written by Shiv Kukreja

“Converting my physical share certificates and mutual fund investments into a dematerialised form has been a huge pain”. This is the experience which many of my clients have shared with me. The reasons are many – lack of knowledge with the clients about how, where and whom to approach, complicated procedures to do it, very little knowledge with the people who work for broking companies or DPs and most importantly very little interest shown by the sales-driven broking industry. We are giving it a shot to simplify the process a bit for you.

How to dematerialise your physical asset holdings

Dematerialisation is the process by which physical certificates of one’s financial investments like shares or mutual funds can be converted into an electronic form. An investor, who wants to get the securities dematerialised, needs to have a demat account with any of the depository participant (DP) like HDFC Securities, ICICI Securities, India Infoline etc.

The investor needs to surrender the certificate(s) to the DP along with the duly filled Dematerialisation Request Form (DRF), who then sends the securities to the concerned Registrar & Transfer (R&T) agent. To avoid any misuse of the share certificates, the investor must ensure that they are defaced by marking “Surrendered for Dematerialisation” on the face of the certificates. After receiving the certificates, R&T agent registers either NSDL or CDSL as the holder and the  client as the beneficial owner of these securities, if the certificates are found to be in order.

On receiving intimation from the R&T agent, NSDL or CDSL credit the securities in the depository account of the client with the DP and inform the client accordingly. It should not take more than 30 days from the date of submission of a demat request to get the holdings dematerialised.

Dematerialisation request is subject to a DP scrutiny and can be rejected in case:

* A single DRF is used to dematerialise securities of more than one company.
* A single DRF is used to dematerialise securities having different ISINs of the same company.
* If the material information on the security certificates is not readable.
* Part of the certificates pertaining to a DRF are either “locked-in” or “partly paid-up”.

Here are some of the common situations I’ve seen over the years.

Transfer cum Demat Form – Transfer of physical securities certificate from one name to another requires the investor to forward the certificate along with the duly stamped and executed “Transfer Deed” and “Transfer cum Dematerialisation” form. While sending the certificates for transfer, the investor must ensure that the transfer duty has been paid, the stamps are cancelled and the transfer deed is complete in all respects like the transferor’s signature, broker’s stamp, SEBI registration/code no., full address of the transferee, everything is there.

Death of a joint holder – Transmission cum Demat Form – In the event of death of a joint holder(s), the other joint holder(s) can get the name of the deceased joint holder(s) deleted from the physical certificate and simultaneously get the securities dematerialised by using the “Transmission cum Demat” form.

Death of a single holder/investor – Transmission in case of nomination – In the event of death of a single beneficial owner (or investor/client), the nominee(s) can get the securities dematerialised by using the “Transmission cum Demat” form along with a notarised copy of the death certificate. These securities will then automatically be transferred in the name(s) of the nominee(s).

Death of a single holder/investor – Transmission in case there is no nomination – In the event of death of a single beneficial owner without a nomination, the legal heir(s) or legal representative(s) can get the securities dematerialised by using the “Transmission cum Demat” form, a notarised copy of the death certificate and any of the following notarised documents – succession certificate or copy of probated will or letter of administration.

Difference in the sequence of holding – Transposition cum Demat Form – The names of the holders on a certificate should exactly match with the names in the demat account and in the same sequence. If the sequence of names on a certificate is different than the sequence in the demat account, then the securities can be dematerialised by using “Transposition cum Dematerialisation” form. e.g., If A and B have a joint demat account in the same sequence and some share certificates are held in the sequence of B and A, then the shares can be dematerialised in the same demat account using the “Transposition cum Demat” form.

Theft/Loss of a certificate – A complaint needs to be lodged with the local police station and a copy of the FIR should be obtained and the event should immediately be reported to the R&T agent along with the certificate no./folio no./distinctive nos. to “Stop Transfer” of such certificate(s). The client should then request for a fresh issue of duplicate certificate by sending both these documents physically to the R&T agent.

Change in the name consequent upon marriage/divorce – The securities certificate along with a copy of marriage certificate/decree of divorce and fresh specimen signature, duly attested by the competent authorities should be forwarded to the R&T agent. The client is also required to open a new demat account with the changed name and then send the new certificate for dematerialisation.

These are some of the most common situations that the clients face. If you’ve any personal special situation/experience regarding dematerialisation of your physical holdings, then please do share with us.