Home / Markets / Stock Markets /  Now shares can be transferred, inherited only in demat form

Mumbai: If your grandmother or your mother has physical shares, she needs to know that if she wants to transfer her shares to anyone it will first have to be converted into a demat form. According to a circular from the Securities and Exchange Board of India (Sebi), apart from transmission or transposition of securities, requests for effecting transfer of securities will not be processed unless the securities are held in dematerialised or demat form with a depository effective 1 April. Transmission means transfer of title of shares by way of inheritance and succession, while transposition means re-arrangement or interchanging of the order of name of shareholders.

Sebi stated that it does not prohibit the investor from holding the shares in physical form even from 1 April. However, if you want to transfer shares which are held in physical form after 1 April, you can do so only after the shares are dematerialised. In case there is a transfer deed lodged prior to deadline and returned due to deficiency in the document, it can be re-lodged for transfer even after the deadline. Here is what you should do:

Switching to demat form

If you have physical shares of companies which are not active and not trading, you can’t convert them to demat form. You can only convert shares that are active and trading on the exchange into demat form. Demat or dematerialised shares are the paper form of securities. Firstly, you have to open a demat account, which is possible through a broking company, bank and an online platform. “Opening a demat account is like opening a bank account," said Ajay Menon, managing director and CEO, broking and distribution, Motilal Oswal Financial Services. You will have to provide know-your-customer documents such as your PAN and bank details. Next, you have to convert the physical shares certificate to demat.

You will have to submit dematerialisation request form (DRF) for up to four share certificates if it is of the same company. In case of more certificates, you have to submit separate sets of DRFs for each company. You need to sign the form and submit the original share certificates with the DRFs along with a photocopy of PAN. “The DRF is given to a depository participant with all the documents with physical share certificates. This is sent to a registrar and transfer agents to convert to electronic form," Nilesh Gokral, COO, Angel Broking Ltd. You will get a message when the process is complete. When your share certificates get accepted, your units will get reflected in your demat account.

Cost and process

Demat account comes with charges. Usually, there is an annual maintenance fee that ranges between 200 and 850 depending on the channel such as banks, stockbroking companies, discount broker and online portals. You also need to check the account-opening fee and charges for every transaction, which will also depend on the channel. Some waive off the annual maintenance charges in case you do a transaction of a certain amount. To convert physical share to demat form, it can cost around 150-400 per certificate. You can do it directly or use the help of online platforms. As per Sebi guidelines, it takes approximately 21 days for the process to be completed; however, it may vary for some companies.

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