How to Convert Physical Share into Demat?

Until the early 2000s, owning shares meant holding physical certificates—paper documents that recorded your name, the company, and the number of shares owned. Today, the Securities and Exchange Board of India (SEBI) mandates that all trades in listed securities be settled in electronic form. If you still possess physical share certificates, you cannot sell them on stock exchanges until they are converted into dematerialised (Demat) form.
This guide explains the complete dematerialisation process, the documents needed, timelines, and the key points to remember to ensure a smooth conversion.

Main reasons to convert your physical shares into Demat form:

• Regulatory compliance: Trading in physical shares has been prohibited since April 2019 for listed companies.
  

• Safety and security: Demat holdings eliminate the risk of loss, theft, forgery, or damage to paper certificates.
  

• Ease of transfer and sale: Electronic holdings can be transferred or sold instantly through your broker.
  

• Corporate action benefits: Dividends, bonus shares, and rights issues are credited directly to your Demat account.

Here’s how the process works, step by step:

Step 1: Open a Demat Account

You must have a Demat account with a Depository Participant (DP) registered with either CDSL or NSDL. This account will hold your converted shares in electronic form.

• Submit KYC documents: PAN card, proof of address, bank details, and a passport-sized photograph.
  

• Complete In-Person Verification (IPV) or Video KYC as per the DP’s process.
  
  

Step 2: Fill the Dematerialisation Request Form (DRF)

Your DP will provide a Dematerialisation Request Form (DRF), which you need to fill for each company’s share certificates.

• Mention details exactly as they appear on the certificate.
  

• Strike off “Surrendered for Dematerialisation” in the certificate to mark it as being processed.
  

• Sign the form exactly as per the specimen signature registered with the company’s registrar.
  

Step 3: Submit Physical Share Certificates and DRF

Attach the original share certificates with the DRF. Ensure:

• Certificates are not torn, damaged, or laminated.
  

• Names and folio numbers match the company records.
  

• If there are joint holders, all must sign the DRF.
  

Step 4: DP Verification and Forwarding

The DP will:

• Verify that all details in the DRF match the certificates.
  

• Enter the request in their system and generate a unique Dematerialisation Request Number (DRN).
  

• Forward your request along with the certificates to the company’s Registrar and Transfer Agent (RTA).
  

Step 5: Verification by the Company’s RTA

The RTA will check:

• Authenticity of the certificates.
  

• Signature and name match with records.
  

• Absence of legal disputes, stop transfer orders, or pledges.
  If all is in order, the RTA confirms the dematerialisation to the depository.
  

Step 6: Credit to Your Demat Account

Once approved, the depository (CDSL or NSDL) will credit the shares to your Demat account under the ISIN (International Securities Identification Number) of the company. You will receive:

• SMS/email confirmation from the depository.
  

• Updated holdings in your DP account statement.

Typically, converting paper shares to Demat takes about two to three weeks from the date of submission, provided all details are correct. Delays can occur if:

• The signatures differ from RTA records.
  

• Certificates are damaged or defaced.
  

• There are pending corporate or legal disputes.
  

Here are a few cases that may require extra steps before you can proceed:

Lost or Damaged Certificates

You must first apply for a duplicate certificate from the company’s RTA with supporting affidavits, indemnity bonds, and police complaint (FIR) where required.

Name Change or Mismatch

If your name has changed due to marriage or other reasons, update it with the RTA before submitting the DRF, by providing a gazette notification, marriage certificate, or court order.

Joint Holder Differences

Ensure the sequence and spelling of names in the Demat account exactly match those on the share certificate.

In addition to standard DP fees, you may also need to account for these extra costs:

• Dematerialisation charges: Some DPs charge a per-certificate or per-ISIN fee.
  

• Courier or handling fees: Applicable for forwarding documents to the RTA.
  

• Statutory charges: GST on DP service fees.
  

Once your shares are in Demat form, you can enjoy these advantages:

• No need to store or safeguard paper documents.
  

• Immediate sale of shares through your broker.
  

• Automatic credit of corporate actions like dividends and bonuses.
  

• Consolidation of holdings from different certificates into one account.

Once your shares are dematerialised and sold through a broker, the sale proceeds are credited to your linked trading account. From there, investors can transfer money from demat account to bank account seamlessly, ensuring faster access to funds and smoother portfolio management.

Converting paper shares into Demat form is a one-time process that offers long-term convenience, security, and compliance with SEBI regulations. A smooth conversion depends on accuracy in forms, matching details with records, and timely follow-up with your DP. While it may take a few weeks, once completed, you can manage your investments entirely online without handling any physical certificates.

This content is for informational purposes only and the same should not be construed as investment advice. Bajaj Finserv Direct Limited shall not be liable or responsible for any investment decision that you may take based on this content.