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Best Way To Convert Physical to Demat Shares

by Steven Brown

The best way to convert physical shares (shares held in physical forms, such as a share certificate) to demat shares (shares held in electronic form) is to open a demat account with a depository participant (DP) and then submit the physical share certificate and the necessary documents to the DP along with a request for dematerialization (demat).

A DP is a financial institution authorized to offer demat services and hold securities in electronic form. To begin converting physical to demat shares, you will need to open a demat account with a DP. This typically involves filling out an account opening form and providing proof of identity and address.

What is Physical Share?

Physical shares, also known as paper shares, refer to shares that are held in physical form, such as a share certificate. A share certificate is a document that serves as proof of ownership of a certain number of shares in a company. It typically includes the name of the shareholder, the number of shares owned, and the details of the company in which the shares are held.

Physical shares are typically issued by a company or its registrar and transfer agent when an individual or entity becomes a shareholder in the company. The shareholder can then use the share certificate as evidence of ownership of the shares and to transfer ownership of the shares to another person if desired.

Physical shares can be traded or sold in the same way as other types of securities, but the process may be more cumbersome than trading or selling demat shares, which are held in electronic form. In some jurisdictions, converting physical shares to demat shares may make trading and selling the shares more convenient.

How to Convert Physical to Demat Shares?

To convert physical shares (shares held in physical forms, such as a share certificate) to demat shares (shares held in electronic form), you will need to follow these steps:

  1. Open a demat account with a depository participant (DP). A DP is a financial institution authorized to offer demat services and hold securities in electronic form. You will need to fill out an account opening form and provide the required documents, such as proof of identity and address.
  2. Obtain a copy of the certificate of holding. This document shows the number of shares you hold and the details of the company in which you hold the shares. You can usually obtain this document from the company, its registrar, and the transfer agent.
  3. Submit the share certificate and the certificate of holding to the DP, along with a request for dematerialization (demat). You may need to provide additional documents, such as a power of attorney, if the shares are registered in someone else’s name.
  4. The DP will verify the documents and initiate the demat process. Once complete, the shares will be credited to your demat account, and the physical share certificate will be returned to you.

It is important to note that converting physical shares to demat shares may vary depending on the specific requirements of the DP and the laws of the relevant jurisdiction. Consult with the DP or a financial advisor to understand the steps you need to take to complete the conversion process.

Conclusion

Once you have the physical share certificate and the certificate of holding, you can submit them to the DP along with a request for demat. The DP will verify the documents and initiate the demat process, which typically involves canceling the physical share certificate and crediting the shares to your demat account. It is important to note that converting physical shares to demat shares may vary depending on the specific requirements of the DP and the laws of the relevant jurisdiction. It may be helpful to consult with the DP or a financial advisor to understand the specific steps you need to take to complete the conversion process.

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