Demat (Dematerialisation) of Physical Shares

Demat was introduced in India in 1996 as a means to electronically hold and trade securities. It has now become a vital necessity due to the Securities Exchange Board of India (SEBI) notification. The notification, effective from April 1, 2019, restricts the transfer of physical shares, except for transmission and transposition, in both stock exchanges and off-market transactions.

The introduction of Demat revolutionized the Indian stock market, streamlining the process of buying, selling, and transferring securities and enabling investors to hold their investments in a dematerialized form. Since its inception, Demat has become an integral part of the Indian financial system, facilitating efficient and transparent trading activities. In order to sell or transfer physical shares, it is only possible if the shares have been dematerialized and converted into electronic form. Despite its apparent simplicity, the process of opening a Demat Account and submitting shares to the DP presents its unique challenges.

Whether it entails rectifying a minor spelling error in the shareholder’s name as printed on the physical shares or addressing changes in the shareholder’s signature over time, each scenario requires a distinct approach.