SEBI has amended the Listing Obligation and Disclosure Requirements (LODR) regulations. In a new directive, shareholders holding physical share certificates should convert it into dematerialized form by December 5, 2018:-

Notification for same has been issued on “The gazette notification was issued on June 8, 2018

A. Impact:

The shareholders who continue to hold shares and other types of securities of listed companies in physical form even after 05.12.2018, will not be able to lodge the shares with company / its RTA for further transfer.

Note: Only the requests for transmission and transposition of securities in physical form, will be accepted by the listed companies / their RTAs.

B. What will happen if I don’t demat my physical shares?:

In this case, Shareholder will not be able to sell or transfer your shares after December 5, 2018. You will have to wait for demat of shares before being able to sell/transfer them.

C. In case of demise of shareholder holding physical securities, what could be the procedure to transfer those physical securities (nominee registered / nominee not registered)?:

Transmission and transposition of shares held in paper form will continue to be allowed. Transmission happens upon death of any or all shareholders. Transposition means change in ownership pattern; eg. From combination A & B (in this order) to B & A or from A & B & C to B & A & C. Though these will still be possible in paper form even after Dec. 4, 2018, conversion to demat is still suggested for many other benefits it offers.Issue its securities only in dematerialized form; and

D. Conclusion:

Therefore one can opine that all the securities holder of shares of Listed Companies are required to dematerialized their physical shares before 05.12.2018. After 05.12.2018 share cant be transfer if shall be in physical mode.

(Author – CS Divesh Goyal, GOYAL DIVESH & ASSOCIATES Company Secretary in Practice from Delhi and can be contacted at csdiveshgoyal@gmail.com).

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2 responses to “Restriction on Transfer of Shares of Listed Company in Physical Form”

  1. Rajesh Kumar Sharma says:

    Sir
    1.Our company deals in share trading last 28 years 2. our company hold many types company’s shares ( in physical form) whch is delisted any reason and we hold approximate 300 types shares in heavy number.
    3. If we hold shares in physical form and company is not traceable what can do.
    4.The Government taken this action and given the deadline of 5th December 2018, but before taken this action why Government not taken action against those companies and their director which is share issued and after delist any reason,
    5. This action of Government total loss of investor and government help those companies which is delist and companies’s directors enjoy with investor hard earned money, why

  2. Avinash Vishnu Bhadkamkar says:

    I am seeing this first time. The period for physical to Demat is very short. In case of death of the share holder, i think, it has to be sent first to the company / registrar. Since many years back shares were taken, signature may defer. Does this order means one cannot transfer physical shares to Demat account?

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