04-10-2012, 12:24 PM
DEMATERIALISATION OF SHARES
Dematerialisation of Shares.pptx (Size: 191.94 KB / Downloads: 45)
What is Dematerialization?
Dematerialization (“Demat” in short form) signifies conversion of a
share certificate from its physical form to electronic form for the same
number of holding which is credited to your DEMAT account which
you open with a Depository Participant (DP).
Who is a Depository Participant (DP)?
A Depository Participant (DP) is your representative (agent) in the
depository system providing the link between the Company and you
through the Depository.
Your Depository Participant will maintain your securities account
balances and intimate to you the status of your holding from time to time.
According to SEBI guidelines, Financial Institutions like banks,
custodians, stockbrokers etc. can become participants in the depository.
A DP is one with whom you need to open an account to deal in
electronic form.
While the Depository can be compared to a Bank, DP is like a branch
of your bank with whom you can have an account.
How can one dematerialise securities?
Surrender certificates for dematerialisation to your DP.
DP intimates to the Depository regarding the request through the
system.
DP submits the certificates to the registrar of the Issuer Company.
Registrar confirms the dematerialisation request from depository.
After dematerialising the certificates, Registrar updates accounts and
informs depository regarding completion of dematerialisation.
Depository updates its accounts and informs the DP.
DP updates the demat account of the investor.
Benefits of availing depository services?
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, thefts etc.
Reduction in paperwork involved in transfer of securities
Reduction in transaction cost
Even one share can be traded