Ban on transfer of physical shares: What should investors do now?Are you stuck with physical share certificates of listed companies which you inherited from your family? If yes, do you know that from December 5, transfer of listed securities will be permitted only if the shares are in dematerialised form?

At present, you are permitted to send physical certificates for transfer to the registrar. Then, you can get new certificates issued in your name. But that will change from December as all requests for transfer of shares will have to be in demat format only.

Dematerialisation can be done after the transfer of physical certificates into your name. This will only be permitted till December 4th of 2018, wherein an investor can transfer shares into their name in physical form purely on the basis of the Transfer Deed (TD). But effective December 5th December, only demat transfer requests will be considered by the registrar. Physical requests will not be entertained from then. This means if you are holding physical certificates, then it will not be possible to sell these shares. You would be required to first dematerialise those shares.

Do remember that the above rules apply to shares of listed companies that are listed on a recognised stock exchange. This rule for transfer will not apply to unlisted shares, however, it may be made applicable later.

This does not mean, however, that you cannot hold shares in physical form. All physical shares do not, we repeat, do not become worthless after this announcement. You are still free to hold the shares in physical form. It is just that you cannot sell the shares or transfer the shares if they are in physical form. At present, you can send a physical certificate with the TD and the registrar will send you the fresh certificates with your name as the registered owner on the certificate itself. This process will not be possible any longer after December 5th.

So, if you are having physical shares then you have to get them dematerialised. Only then, can you either sell these shares in the market or transfer these shares to another Depositary Participatory (DP) account. After December 5th, if you send physical certificates to the registrar, they will be rejected. You will get a communication that you submitted an invalid request.

As it stands now, in case you are holding physical shares there are two options. One, you can look to transfer the physical shares physically into your name before December 5th. Two, you can open a demat account and get these shares dematerialised now.

In case you already have a demat account, you can dematerialise these shares into the same demat account. Do ensure that the name on the share certificate and the demat account match. Otherwise, there will be complications. In the case of joint accounts, the order of names should also be the same i.e. first comes first and second name comes second.

It is better that you start the process right away because the process of dematerialisation itself can take up to 30-45 days. As per the SEBI guidelines, it takes approximately 21 days for the process to complete; however, it may vary in case of some companies. Once the shares are dematerialised, you will be free to either transfer the shares or even sell the shares.

There is currently, a limited physical market wherein you can sell up to 500 shares in physical form. When all share transfer is made compulsory in demat format, this window may not be required.

Procedure to dematerialise physical shares with NSDL

Scenario 1: 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.

Scenario 2: 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.

For DP search:
https://nsdl.co.in/dps_search.php

For Fee Charge Structure:
https://nsdl.co.in/about/dps.php