According to the regulations laid out by the Securities and Exchange Board of India (SEBI), you can only trade and invest in shares that are in the dematerialized format. This step was taken primarily to ease the process of buying, selling, and transferring the shares of a company.
If you’re holding physical share certificates, you’re required to first convert them into an electronic format before you can sell or transfer the shares. The process of converting the physical shares of a company into an electronic form is commonly known as dematerialization. You’re required to open a demat account with a depository participant before raising a request for conversion of your physical shares.
Compared to physical share certificates, dematerialized shares offer many benefits to investors. Some of these advantages are briefly explained below.
Now that you’re aware of what dematerialized shares are and why they are advantageous, let’s take a brief look at the basic process involved in the conversion of physical shares to demat form.
Before placing a formal request for conversion, you will have to first initiate the trading account opening process with a depository participant (DP). There are several DPs like IIFL, who offer free demat account opening online services. Listed below are the general steps involved in the demat and trading account opening process.
Once you open a demat account, you need to place a request for conversion of your physical share certificates into dematerialized format. The steps mentioned below will give you a fair idea of how to raise a dematerialization request with your DP.
While the process of dematerialization may seem lengthy, it requires very minimal user intervention. This entire process of conversion of physical share certificates into dematerialized form is likely to take around 2 to 3 weeks. Once your demat account gets credited, you are free to either sell or transfer your shares as and when you need.