Dematerialisation(Demat) FAQs |
1: What is Demat account?
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Dematerialization ('Demat') is the process of converting the Physical shares in the electronic form.
Dematerialization of shares is optional and an investor can still hold shares in physical form. But for any further transaction of a share one should have to convert them in Demat form.
It’s mandatory, the shares of the company are to be compulsorily traded in demat form.
The Depositories Act 1996 has been enacted to regulate the matters related and incidental to the operation of Depositories and demat operations. Two Depositories are in operation - National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL).
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2: Advantage of Demat
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Advantage of demat is paperless trading. After converting the electronic copy all the transaction and transfer of shares processed electronically without involvement of any physical forms.
Second advantage is save of time and avoid the complex processing.
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3: How do I demat my shares?
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To convert your shares in electronic format you have to follow 3 simple steps:
Step1: Open an account with DP (Depository Participant) and get the client id with the same name appear on the physical shares.
Step2: Fill the DRF (Dematerialization Request Form) to convert the physical shares into electronic shares. Person has to slender his physical shares with DRF.
Step3: After that process will take approx 30 days to convert the shares in electronic format. And one will become beneficial owner of these dematerialized shares.
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4: Are there any charges for demat the physical shares??
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Yes there are some charges and that are differ from DP to DP. Shareholder should have to bare this charge.
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5: I have purchased some shares in Physical (paper) form. Can I directly give the share certificates to my DP for dematting them in my favor?
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No, All the shares which are going for demat must be on the person’s name, Prior to dematting your shares, they have to be registered in your favor. Hence, you have to necessarily lodge the share certificates with a duly executed transfer deed with the company’s registrar and share transfer agent.
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6: Can I pledge my shares in demat form for the purpose of availing any funding/loan arrangement with my bankers?
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Yes. You will have to contact your DP for this.
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7: How does the Depository System operate?
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The operations in the Depository System involve the participation of a Depository, Depository Participants, Company/Registrars and Investors. The company is also called the Issuer.
A Depository (NSDL and CDSL) is an organization like a Central Bank, i.e. Reserve Bank where the securities on an investor are held in electronic form, through Depository participants.
A Depository Participant is the agent of the Depository and is the medium through which the shares are held in the electronic form. They are also the representatives of the investor, providing the link between the investor and the company through the Depository.
To draw analogy, the Depository system functions very much like the banking system. A bank holds funds in accounts whereas, a Depository holds securities in accounts for its clients. A bank transfers funds between accounts whereas, a Depository transfers securities between accounts.
In both systems, the transfer of funds or securities happens without the actual handling of funds or securities. Both the banks and the Depository are accountable for safe keeping of funds and securities respectively.
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Messages |
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Mann
Registered User
Member Since: 11/28/2007
Message Posted: 13 |
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Posted on 9/14/2010 10:09:55 PM |
Process of Demat
Want to open a new discussion form for Converting the Physical Shares into demat a/c. |
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Pcdoshi
Registered User
Member Since: 9/19/2010 2:21:13 AM
Messages Posted: 4 |
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Posted on 9/19/2010 2:46:58 AM |
Re: Process of Demat
Due to lengthy process and documents required for DEMAT lot of share are nor available in the market. SEBI should find out a simple process fro shares of rate Rs 25/- and less so that lot of money lying unutalised can come to market . should SEBI give a plan ? |
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