For those who have been a part of the share market, this is not a new term but for the ones who are new in the industry this is a broad concept. Dematerialisation of shares means that you have to convert physical form of shares into electronic form. Ever since there have been the concept of demat accounts it as become essential and mandatory for everyone to dematerialise the shares.
If you have watched the movie Harshad Mehta, then it has shown the real condition of the share market. People used to pounce on each other and the bears and bulls were the Gods of the market. Now you do not have to go and stand out in the crowd. You just need to have the knowledge about the shares and it is all set with a demat account.
Benefits of Stock Dematerialization
Are you willing to invest in shares? Then let us help you understand the benefits of dematerialistion first:
Because dematerialization involves converting physical shares into electronic ones, you won’t have to worry about your share certificates being damaged, mutilated, lost, or stolen. You may safely keep all of your shares in one demat account that you can access from practically anywhere on the planet. There were several instances of forgery, fraud, and duplication while physical share certificates were still in circulation. None of these situations are feasible with dematerialized shares.
The best thing of going digitised is that you do not need to wait for days for the shares to be transferred into your account. The entire thing works instantly.
What is the process of dematerialisation
The process of dematerializing shares is straightforward and straightforward. It also only takes a few days to complete. Here’s a quick rundown of how the dematerialization of shares works.
- To begin, you must create a demat account with a depository through a depository participant (DP). The stockbroker with whom you have a trading account usually also serves as a DP.
- After you’ve created a demat account, you’ll need to send your DP a completed Dematerialization Request Form (DRF) together with your physical share certificates.
- If you possess shares of many firms, then you’ll have to submit a duly-filled DRF for each company together with the applicable share certificates.
- When your DP receives the DRF, he or she will review both the form and the securities to confirm that everything is in order.
- You will get a Dematerialization Request Number (DRN) as an acknowledgement after the DP is pleased with your request.
- The DP then sends your request to the company’s Registrar and Share Transfer Agent (RTA).
- Once the company’s RTA approves your dematerialization request, the physical share certificates are converted to electronic form and then destroyed.
- Finally, your demat account is credited with the newly dematerialized shares, which you may either sell or transfer to other accounts.
This was a short guide to help you with dematerialisation. You need to make sure that you have the documents required for demat account ready with you to enjoy trading in shares.