How to Transfer Physical Shares into a Demat Account

Transferring physical shares into a Demat account is known as the dematerialisation of shares. This process involves converting share certificates held in paper format into electronic form. It enables secure storage and faster transactions, simplifying the process of managing your portfolio. 

As per a circular issued in 2023 by the Securities and Exchange Board of India (SEBI), it is mandatory to hold securities in Demat form for trading in listed companies. This makes dematerialisation essential. 

A Depository Participant (DP), which acts as an intermediary between you and the central depositories, carries out the dematerialisation process. Central depositories include National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL).

To unlock the full potential of your investments, know the steps involved in the conversion of physical securities into dematerialised form. These include:

1. Open a Demat Account

To begin, you need a Demat account with a SEBI-registered Depository Participant (bank, broker, or financial institution). Submit KYC documents such as PAN, Aadhaar, proof of address, and a passport-size photograph. Complete the application and verification process.

2. Fill the Dematerialisation Request Form (DRF) and Annexure 

Collect the DRF from your DP. This form must be filled out separately for each company whose shares you want to dematerialise. Fill in details like:

• Client ID

• Company name

• ISIN (International Securities Identification Number)

• Certificate numbers

• Number of shares

• Details of Locked-in securities
  
  

Ensure that your name on the share certificate matches the name in your Demat account. For jointly held shares, the order of names should also match.

The DRF Annexure is required when you own multiple shares and the certificates are not in sequence. 

3. Submit Share Certificates, DRF, and Annexure

Attach the original physical share certificates (with the name of the issuer and face value visible on them) to the DRF. Then submit them along with the DRF Annexure, if needed, to your DP. Ensure your signature on the form matches the records with the Registrar and Transfer Agent (R&TA).

4. Verification by DP and Forwarding to R&TA

The DP will verify the documents and send them to the company’s R&TA. If there are discrepancies, the documents may be returned for correction.

5. Approval and Dematerialisation

Once verified, the R&TA processes the request and confirms dematerialisation. The electronic shares are then credited to your Demat account.

To ensure a smooth and successful process, make sure to have the correct documentation. These include:

• Dematerialisation Request Form (DRF)

• DRF Annexure, if needed
  

• Original physical share certificates defaced by writing ‘SURRENDERED FOR DEMATERIALISATION’
  

• Identity and address proof (Aadhaar, Voter ID, etc.)

• PAN Card copy, usually self-attested

• Bank account details or cancelled cheque

• Passport-size photograph

   

Other documents as asked for by the DP, including a copy of your Client Master Report (CMR) or account opening form

The process of converting physical shares to electronic form is typically completed in 30 days. As per SEBI guidelines, the Depository Participant (DP) need to process requests within 7 days. The issuer company or its Registrar and Share Transfer Agent (R&TA) then takes up to 15 days, along with the time for document delivery. The process may thus take anywhere from 21 to 30 days.

Your Depository Participant may levy costs for the services involved in converting your paper certificates into electronic form. These generally include:

• DRF processing fee

• Dematerialisation charges per share certificate (may go up to ₹400 each)

• Service or transaction charges by the DP

   

You can check the exact cost with your DP before initiating the process. Check the Schedule of Charges section in the ‘Rights and Obligations of Beneficial Owner and Depository Participant’ document.

In an increasingly digital financial world, paper certificates pose limitations and carry inherent risks. The following are the benefits you can enjoy by dematerialising securities:

• Eliminates the risk of loss, theft, or damage to physical certificates
  

• Facilitates easy transfer and trading of shares
  

• Reduces paperwork and transaction delays
  

• Enables consolidated account management and real-time portfolio tracking
  

• Helps comply with SEBI's electronic trading regulations
  

When initiating dematerialisation, you may encounter minor administrative glitches or other issues that may delay the process. Check some of these issues below and learn how to overcome them:

When requesting dematerialisation, certain critical details can significantly impact the success and speed of the process. These include paying heed to the following: 

• Ensure your signature matches the one in the company records
  

• If the certificates are held jointly, the names must be in the correct order
  

• Check ISIN numbers carefully while filling the DRF

   

If shares are held in a deceased person’s name, additional legal documents may be required

Once the dematerialisation request is approved:

• The physical certificates become invalid
  

• An electronic entry is made in your Demat account
  

• You can now view and manage your holdings online
  

• You can trade, transfer, or pledge shared digitally
  

This content is for educational purpose 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.