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    Meaning of Dematerialization

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    Dematerialization is the process of converting physical share certificates into electronic form by crediting them to the depository participant's account. The physical certificates are shredded and the number of shares is entered electronically. Dematerialized shares do not have certificate numbers and are instead dealt with only by quantity. To dematerialize shares, an investor must have a depository account, the shares must be eligible for dematerialization, in the investor's name, and a separate request form must be submitted for each company's shares along with the physical certificates.

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    Meaning of Dematerialization

    Uploaded by

    banks
    113 views2 pages
    Dematerialization is the process of converting physical share certificates into electronic form by crediting them to the depository participant's account. The physical certificates are shredded and the number of shares is entered electronically. Dematerialized shares do not have certificate numbers and are instead dealt with only by quantity. To dematerialize shares, an investor must have a depository account, the shares must be eligible for dematerialization, in the investor's name, and a separate request form must be submitted for each company's shares along with the physical certificates.

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    Dematerialization is the process of converting physical share certificates into electronic form by crediting them to the depository participant's account. The physical certificates are shredded and the number of shares is entered electronically. Dematerialized shares do not have certificate numbers and are instead dealt with only by quantity. To dematerialize shares, an investor must have a depository account, the shares must be eligible for dematerialization, in the investor's name, and a separate request form must be submitted for each company's shares along with the physical certificates.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    113 views2 pages

    Meaning of Dematerialization

    Uploaded by

    banks
    Dematerialization is the process of converting physical share certificates into electronic form by crediting them to the depository participant's account. The physical certificates are shredded and the number of shares is entered electronically. Dematerialized shares do not have certificate numbers and are instead dealt with only by quantity. To dematerialize shares, an investor must have a depository account, the shares must be eligible for dematerialization, in the investor's name, and a separate request form must be submitted for each company's shares along with the physical certificates.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    Meaning of Dematerialization

    Dematerialization is a process by which physical certificates of an investor are


    converted into electronic form and credited to the account of the depository
    participant. Dematted securities do not have any certificate numbers or
    distinctive numbers and are dealt only in quantity, i.e., the securities are
    replaceable.
    Investors can dematerialize only those certificates that are already registered in
    their names and are in the list of securities admitted for dematerialization. These
    are: shares, scrips, stocks, bonds, debentures, stock or other marketable
    securities of a like nature in or of any incorporated company or other body
    corporate, units of mutual funds, rights under collective investment schemes and
    venture capital funds, commercial paper, certificate of deposit, securities debt,
    money market instruments and unlisted securities, underlying sharing of
    American Depository Receipts and Global Depository Receipts issued to nonresident holders.[2] Dematerialization is the process of converting physical
    holdings into electronic form with the depository wherein the share certificates
    are shredded and corresponding entry of the number of shares is done in the
    opened with the depository.
    The securities held in dematerialized form are fungible; that is, they do not bear
    any notable feature like distinctive number, folio number or certificate number.
    Once shares get dematerialized, they lose their identity in terms of share
    certificate distinctive numbers and folio numbers.
    Following requisites are necessary for dematerialization of securities:
    1. Investors should have a depository account.
    2. Securities should be from the eligible list of securities issued by the depository.
    [3]
    3. Securities must be in the name of the account holders and owned by him.
    4. Separate demat requisition form is required for each issuer company.
    5. DRF[4] should be signed by all the holders so as to match specimen signature.
    Process of Demating Shares
    The process of opening an account with a Depository Participant is similar to the
    opening of a bank account.
    One has to open an account with a Depository Participant (DP) by filling up an
    Account Opening Form and signing a Participant-Client Agreement. Then a
    unique client ID number will be given, which must be quoted in all
    correspondence with the DP.
    Thereafter, one has to fill up and submit a Dematerialization Request Form (DRF)
    provided by the DP duly signed by all the holders and surrender the physical
    shares intended to be dematted to the DP.
    The DP upon receipt of the shares and the DRF will issue an acknowledgement
    and will send an electronic request to the Company/ Registrars and Transfer
    Agents of the Company through the Depository for confirmation of demat. The
    DP will simultaneously surrender the DRF and the shares to the Company /
    Registrars and Transfer Agents of the Company with a covering letter requesting
    the Company to confirm demat.
    The Registrars and Transfer Agents of the Company, after necessary verification
    of the documents received from the DP, will cancel the physical shares and
    confirm demat to the Depository. This confirmation will be passed on by the
    Depository to the DP which holds investors account. After receiving this
    confirmation from the Depository, the DP will credit investor account with the
    number of shares dematerialized. The DP will hold the shares in the
    dematerialized form thereafter on behalf of the investor. And hence one becomes
    the beneficial owner of these dematerialized shares.

    When the beneficial owner submits the shares for dematerialization, his DP will
    deface the share certificates with the stamp SURRENDERED FOR
    DEMATERIALISATION. This ensures that shares are not lost in transit or misused
    till credit is received in demat account.

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