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SEBI has recently notified non-promoter shareholders to get their shares converted in demat form and has also given a deadline till December to dematerialise their shares.

The Securities and Exchange Board of India (SEBI) has tweaked the Listing Obligations and Disclosure Requirements (LODR) after about seven years when it made dematerialisation of shares held by promoters compulsory.

The move is aimed at improving transparency in the dealing of securities and also to avoid instances of huge frauds in the form of claiming dividends by forged documents. However, the conversion process may not be a cakewalk for investors.

  • If the investors had purchased physical shares out of the market with transfer deeds but still have not transferred those shares to his/her name, they will have to first get shares transferred to their name and then convert those shares into demat form.
  • If the physical shares are not transferred by the investors before the final date, they will have to get those reissued by the registrar and transfer agents (RTA) by doing some paper formalities, including indemnity, and then get those transferred into demat form.
  • In the case of physical shareholders who have not claimed dividend for seven years, those shares would be transferred to IEPF (Investor Education and Protection Fund) account. This will create difficulties for successors to recover those shares from IEPF account.
  • Most of the shareholders are still not aware of the notification due to lack of awareness drive by the capital markets regulator.
  • If the value of stocks is less than Rs 10,000, then the investor should open a BSDA (basic service demat account) where the annual maintenance charges (AMC) are nil.
  • If the value of stocks is between Rs 50,000 to two lakh rupees, then the AMC charge on a demat and trading account is Rs 100.

 “Client should go to a reputed broker nearest to his home or place of work,”.

Last modified on Friday, 06 July 2018

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