Till now, Dematerialisation of Shares was a mandatory requirement for a listed entity to have its 100% promoter shareholding and 50% non promoter shareholding in demat form. But now, as a part of its drive to lift the corporate veil, target benami transactions and bring more transparency, the government plans to make it compulsory for unlisted Companies to get their shares dematerialised, according to government officials. In this article, we will discuss about what is dematerialization and how we can get our shares in demat form.

Dematerialisation, or demat, in a very simple language involves conversion of physical stocks into electronic form.

PROCESS OF DEMATERILISATION OF SHARES

  • To start with, you have to choose between the various depository participants available in the market to open the demat account.
  • The following documents shall be required to open the demat account, depending upon the entity type and the requirements of every depository participant:
  • Board Resolution in case of Company.
  • PAN of the Company/Individual.
  • Certified copy of INC-22 along with paid challan of Company/Proof of residence of individual.
  • Photographs of Individual/Authorised Signatory in case of Company.
  • Latest Income Tax Returns of the applicants.
  • Proof of identity and residence of the directors/promoters of the Company.

             Please note it takes around 15 – 30 days to open a demat account.

  • Once demat account is opened, the request for conversion of physical shares has to be made in “Dematerialisation Request Form” (DRF) and the same has to be deposited along with the share certificates to the Depository Participant (“DP”).
  • The DP shall process the request to the Company along with DRF and share certificates.
  • Once the request is accepted by the Company, the Company shall destroy the physical share certificates and confirm the dematerialization of shares to the concerned DP.

BENEFITS OF DEMATERIALISATION OF SHARES

  • Transfer of shares can be very conveniently done it will take less time and no stamp duty shall be levied.
  • Easy track record of all the transactions can be maintained.
  • Sometime the share certificates get lost, destroyed due to fire, decay, etc which is not the case in case of dematerialisation of shares.

{The author is a Company Secretary in Practice and can be reached at (M) 9999952595 and (E) [email protected]}

Author Bio

Qualification: CS
Company: Kajal Goyal and Associates
Location: Delhi, Delhi, India
Member Since: 11 Jun 2018 | Total Posts: 86
KAJAL GOYAL AND ASSOCIATES, is a Company Secretary proprietorship firm, offering its expertise and one stop solutions for all Corporate compliance requirements to the clients with a strong emphasis on ethics and ‘being on toes’. Capable delivering services related to Companies Act, FEMA, Re View Full Profile

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