Demat Account: Charges applicable on converting physical shares into electronic form

Dematerialisation is the process by which a trader or investor converts physical share certificates into electronic shares.

Physical shares can be dematerialised if they have the company's name and face value on them. To verify the physical share certificate, visit bseindia.com and enter the company name or ISIN. If the face value on the certificate does not match the current face value, clients should contact the Registrar and Transfer Agents (RTA) to obtain an updated certificate. This step is essential to ensure that the share certificate is valid and up to date before proceeding with the dematerialisation process.

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Charges to convert physical shares into demat form

The cost of converting physical shares into electronic form includes various charges that the investor must consider:

Broker Charges: Brokers may charge fees for their services in processing the dematerialisation request. These charges can vary significantly, so it is advisable for investors to inquire about them upfront.

Annual Maintenance Fee: Banks and brokerage firms typically charge an annual maintenance fee, ranging from ₹200 to ₹850. This fee is for the upkeep of the investor's demat account.

Transaction Charges: These charges vary from broker to broker and encompass fees for each transaction made when converting shares.

Dematerialisation Charges: The cost of converting physical shares ranges from approximately ₹150 to ₹400 per share certificate.

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The entire process can often be managed online, providing a convenient option for investors. According to SEBI guidelines, the conversion process should be completed within 21 days; however, for some companies, the process may take longer. Investors should account for potential delays and factor them into their planning.

To dematerialise physical share certificates, the following documents need to be submitted:

Dematerialisation Request Form (DRF): Two copies of the DRF are required for up to four share certificates of the same company. If the share certificates are in sequence (e.g., 1505101, 1505102, 1505103), two DRF forms will be sufficient even if there are more than four certificates.

DRF Annexure: If the share certificates are not in sequence, two DRF forms and the DRF annexure must be submitted.

If there are share certificates of more than one company, separate sets of DRFs and DRF annexures should be provided for each company. This ensures proper and smooth dematerialisation of physical shares across different companies. The original share certificates must be submitted along with the DRFs. A photocopy can be kept for reference.

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Apart from these one must also include KYC documents including address proof and a self-attested copy of PAN card.

Submission and conversion process:

To dematerialise physical shares, the shareholder must submit the share certificates along with the Dematerialisation Request Forms (DRFs) and Know Your Customer (KYC) documents to their broker. The broker will then forward the transferable shares and the documents to a registrar and transfer agent, who will convert the shares into electronic form. The RTA will take up to 25 days to complete the dematerialisation process.

Once the physical share certificates are converted, they will appear in the shareholder's demat account. This process allows the shares to be held and managed electronically for greater efficiency and security.

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Converting physical shares into demat form offers several advantages:

Security: Holding securities in a demat account is a secure and convenient method. It eliminates the risks associated with physical certificates, such as damage, loss, counterfeiting, and theft. Only authorised users can access their demat accounts.

Easy Accessibility: The digital format allows you to buy and sell shares without visiting a broker's office. You can easily access your demat account online to monitor your portfolio, access account statements, and transfer securities.

Credit Facilities: Financial institutions offer secured loan facilities against the value of shares in your demat account, providing you with additional financial flexibility.

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International Trading Facilities: Demat accounts allow investors, particularly non-resident Indians (NRIs), to trade in Indian stock exchanges from abroad. They can simply log in to their accounts to buy or sell company stocks.

Nominations: In the event of the investor's untimely death, the shares in the demat account can be transferred to the nominated beneficiary, ensuring a smooth transfer of assets.

FAQs

How do I verify the physical share certificates before dematerialisation?

You can visit the BSE India website and enter the company name or ISIN to verify the validity of your physical share certificates.

Read here: Can you link multiple trading accounts to your demat account?

What documents do I need to submit for dematerialisation?

You need to submit the Dematerialization Request Form (DRF), DRF annexure (if applicable), Know Your Customer (KYC) documents (such as proof of address and a self-attested copy of your PAN card), and the original physical share certificates.

What is the process of converting physical shares to demat?

Submit your share certificates, DRF, and KYC documents to your broker. The broker will then forward your documents and certificates to a registrar and transfer agent (RTA), who will convert them into electronic form.

How long does the dematerialisation process take?

According to SEBI guidelines, the process should be completed within 21 days. However, it may take longer for some companies.

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What charges are involved in the conversion process?

Charges may include broker fees, annual maintenance fees ( ₹200 to ₹850), transaction charges, and dematerialisation charges (around ₹150 to ₹400 per share certificate).

Can I convert shares from different companies at the same time?

Yes, but you will need to provide separate sets of DRFs and annexures for each company.