SEBI has recently amended relevant provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 to disallow listed companies from accepting request for transfer of securities which are held in physical form, with effect from April 1, 2019. The shareholders who continue to hold shares and other types of securities of listed companies in physical form even after this date, will not be able to lodge the shares with company / its RTA for further transfer. They will need to convert them to demat form compulsorily if they wish to effect any transfer. Only the requests for transmission and transposition of securities in physical form, will be accepted by the listed companies / their RTAs.
This amendment will help in curbing fraud and manipulation risk in physical transfer of securities by unscrupulous persons. Further, with shares held in demat form will improve ease, convenience and safety of transactions for investors.
All the investors who are holding shares etc. in physical form, should consider opening a demat account at the earliest and submit request for dematerialization of their shares in order to protect the liquidity of the shares. You may help your friends/relatives who may be holding shares in physical form by informing them about this change. NSDL team will be happy to help if you have any queries in this regard. You may reach us at firstname.lastname@example.org | Investor Helpline Number 1800222990
FAQs for Mandatory Dematerialization:
The notification is about the new regulation made by SEBI for Mandatory Dematerialization of physical shares held by an investor. Going ahead from April 1, 2019, an investor will not be able to transfer the shares held in physical form using a transfer deed. The transfer will be possible only after dematerialization of these physical shares.
The gazette notification was issued on June 8, 2018
If you already have a demat account:
You can visit your Depository participant (Bank/Broker), fill up the DRF form available with the DP, attach your physical share certificates with it and submit the same to the DP.
If you do not have a demat account:
You can visit any Depository participant (Bank/Broker) of your choice and open a demat account. You may also visit our website www.nsdl.co.in to check for the depository participant service centers in your area.
As per the SEBI guidelines, it takes approximately 21 days for the process to complete; however, it may vary in case of some companies. You can check the status of Dematerialization with your DP.
In this case, you will not be able to sell or transfer your shares after April 1, 2019. You will have to wait for demat of shares before being able to sell/transfer them. However, you may continue to hold your shares in physical form, if you desire so.
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; e.g. 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 April 1, 2019, conversion to demat is still suggested for many other benefits it offers.
Investors may continue holding non-listed shares in physical form. They will be able to sell/transfer the shares as they wish even after April 1, 2019. However, you may suggest your non-listed company to join NSDL so that even those shares can be dematerialized and shareholders can benefit from the same.
Transmission of shares held in paper form will continue to be allowed in favor of surviving shareholders. Alternatively, remaining shareholders can open a demat account in their names and request the company for transmission cum demat from their DP.
Since it is a demise of the shareholder, the transmission rule will apply here and so it can still happen in physical form. Post the legal process gets over and the physical certificates been issued in the name of the nominee, the same can be dematerialized.
Yes, the transmission and the transposition can be done for share certificates at the same time.
LIC future plus and future plus bonds are Mutual Fund schemes. All the mutual fund units are available for demat.