Things to know about Dematerialisation of share certificates

blog, Documentation, General, Taxation

Dematerialisation offers you flexibility along with security and convenience. Nowadays, holding share certificates in physical format carries risks like certificate forgeries, loss of important share certificates, and consequent delays in certificate transfers. Dematerialisation eliminates these hassles by allowing customers to convert their physical certificates into electronic format.


Dematerialisation is the process of converting physical shares into electronic format. It is important now to convert the physical shares into a demat form as one cannot trade in shares if they are in physical certificate form.


Apart from the restriction in trading, there are other advantages of converting the physical shares into demat form:

  • It is easy to manage them in electronic form
  • No fear of loss as the records are there with a DP
  • Contact details and address are automatically updated in the records of all the companies for which a demat account holder has shares
  • One can also demat the Mutual Funds into a demat account

Process of Dematerlisation:- 

Any person who wants to open a demat account needs to approach a Depository Participant (DP) and submit his KYC documents and fill a form. Once the demat account is opened one can surrender their physical shares, fill a form, and submit them to his DP and the DP processes these documents. The company, then, in their records note the demat account number and demat account holder details and credit the demat account with the electronic shares directly.

One important thing to note is that earlier people used to buy shares in different combinations of family members. Some shares will be like:

  • Under father’s name
  • Some in mother’s name
  • Some in father as first holder and mother as second holder
  • Some in mother as first holder and father as second holder

If one has physical shares in combinations as illustrated above, then one either needs to open separate demat account as per combinations or get it transferred in one single name or joint name combination before these shares can be demated in India.