The Hindu Business Line : Switching to paperless mode

Dematerialisation is the process by which physical certificates of an investor are converted to an equivalent number of securities in electronic form and credited into the investor's account with his/her depository participant (DP).

What are the benefits of availing depository services?

The benefits are enumerated below:-

·* A safe and convenient way to hold securities.

·* Immediate transfer of securities.

·* No stamp duty on transfer of securities.

· * Elimination of risks associated with physical certificates such as bad delivery, fake securities, delays and thefts.

· * Reduction in paperwork involved in transfer of securities.

· * Reduction in transaction cost.

· * No odd lot problem, even one share can be sold.

· * Nomination facility.

· * Change in address recorded with DP gets registered with all companies in which investor holds securities electronically eliminating the need to correspond with each of them separately.

· * Transmission of securities is done by DP eliminating correspondence with companies.

· * Automatic credit into demat account of shares, arising out of bonus/split/consolidation/merger etc.

· * Holding investments in equity and debt instruments in a single account.

How can one convert physical holding into electronic holding i.e how can one dematerialise securities?

In order to dematerialise physical securities one has to fill in a DRF (demat request form), which is available with the DP and submit the same along with the physical certificates one wishes to dematerialise. Separate DRF has to be filled for each ISIN number. The complete process of dematerialisation is outlined below:

* Surrender certificates for dematerialisation to your depository participant.

* Depository participant intimates depository of the request through the system.

* Depository participant submits the certificates to the registrar of the Issuer Company. The Registrar confirms the dematerialisation request from depository.

* After dematerialising the certificates, the Registrar updates accounts and informs depository of the completion of dematerialisation.

* Depository updates its accounts and informs the depository participant.

* Depository participant updates the demat account of the investor.

What is an ISIN?

ISIN (International Securities Identification Number) is a unique identification number for a security.

Can odd lot shares be dematerialised?

Yes, odd lot share certificates can also be dematerialised.

Do dematerialised shares have distinctive numbers?

Dematerialised shares do not have any distinctive numbers. These shares are fungible, which means that all the holdings of a particular security will be identical and interchangeable.

Can electronic holdings be converted back into physical certificates?

Yes. The process is called rematerialisation. If one wishes to get back his securities in the physical form one has to fill in the RRF (remat request form) and request his DP for rematerialisation of the balances in his securities account. The process of rematerialisation is outlined below:

{bull}* One makes a request for rematerialisation.

{bull}* Depository participant intimates depository of the request through the system.

{bull}*Depository confirms rematerialisation request to the Registrar.

{bull}* The Registrar updates accounts and prints certificates.

{bull}*Depository updates accounts and downloads details to depository participant.

{bull} * Registrar dispatches certificates to investor.

Can someone else operate the account on behalf of the Beneficiary Owner on the basis of a power of attorney?

Yes. If the BO authorises any person to operate the account by executing a power of attorney and submit it to the DP, then that person can operate the account on behalf of the BO.

Is addition or deletion of names of account holders permitted after opening the account?

No. The names of the account holders of a BO account cannot be changed. If any change has to be effected by addition or deletion, a new account has to be opened in the desired holding pattern (names) and then transfer the securities to the newly opened account. The old account may be closed.

Can an investor close his demat account with one DP and transfer all securities to another account with another DP?

Yes. The investor can submit account closure request to his DP in the prescribed form. The DP will transfer all the securities lying in the account, as per the instruction, and close the demat account.

What would be the charges for account closure and securities transfer due to account closing?

The transfer of securities consequent to closure of account would be treated like any other transaction and charged as per the schedule of charges agreed upon between the BO and the DP.

Can investors freeze or lock their accounts?

Investors can freeze or lock their accounts for any given period of time, if so desired. Accounts can be frozen for debits (preventing transfer of securities out of accounts) or for credits (preventing any movements of hindrances into accounts) or for both.

Source: www.sebi.gov.in

More Stories on : Stock Markets | Regulatory Bodies & Rulings

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page