A Guide to Transfer Physical Share Certificates to Demat Form in 2025

Transferring a physical share certificate into a demat form refers to the digitalization of shares. It indicates the transmission of shares in electronic form. The process of dematerialization is very popular in India. When it comes to storing a physical or duplicate share certificate, it becomes a tough task. It occurs because physical shares have the tendency to get lost. Not only that but sometimes it can get misplaced. A physical share can also be destroyed easily due to various causes. Later, it creates disturbance related to ownership and more.

At present, technology is evolving not only in India but worldwide. As a result, the dematerialization of shares has become a popular thing in the current digital era. With the help of dematerialization, a shareholder can store their share certificate in a digital form. It reduces the risk associated with a lost share certificate. Investors in India can expect a seamless process of share transfer. Apart from that, they can also store their share certificates safely. Dematerialization mitigates the chance of shares getting misplaced, destroyed, or lost. According to NSDL, there are almost 39 lakh investor accounts in India. Meanwhile, the Demate Custody Value is around INR 438.15 lakh crore.

In this blog, you’ll learn the process of transferring physical shares into demat form. Apart from that, you’ll also learn the benefits of the dematerialization process.

Why Dematerialize Physical Share Certificates? 

The need for dematerializing a physical share certificate is a necessity in the current digital world. In India, investors commence dematerialization to enhance the safety of their shares. In the traditional method, it’s a hectic task to manage all your share certificates and the necessary documents. Aside from that, the process of tracking share certificates is also a difficult task. In the upcoming days, managing shares in the old traditional method may create more disruptions. Therefore, if an investor implements a dematerialization process, they can ease the process of share transmission.

The dematerialization process assists investors in managing their shares efficiently. The dematerialization process also saves an enormous amount of time for an investor. It mitigates the need for paperwork, which is a hectic task in the traditional method. In addition, this digital process also reduces the chance of shares getting misplaced, lost, or destroyed. In other words, dematerialization is an evolved process that protects your shares along with their shareholding rights.

To know why you need to dematerialize your physical shares, you’ve to understand the benefit of the dematerialization procedure. Take a glance at its benefits:

Seamless Process

Compared to traditional processes, dematerialization takes less time. You don’t have to fulfil paperwork requirements when it comes to dematerialization. It helps you to manage and save your original share certificates in an electronic form. It ensures a seamless flow of share transmission.

Safety and Security

In the traditional method, there’s a chance of shares getting misplaced. Apart from that, there are also chances of share certificates getting lost or destroyed. After implementing the dematerialization process, an investor can protect himself from these incidents. The dematerialization ensures the safety and security of a share certificate. The risk associated with a lost share certificate is zero in this method.

Cost Effectiveness

When it comes to share transfer, you’ve to pay a certain amount in the traditional method. The cost may be associated with physical share certificates and their storage charges. Sometimes, you also have to pay additional fees for handling your shares. If an investor opts for a dematerialization process, they don’t have to pay any such fees. In a simple word, dematerialization is a cost-effective process of share transmission.

Faster Settlements

When it comes to settlements, it takes an enormous time in the traditional method. An investor has to go through a lot of legal or mandatory requirements. Meanwhile, in the dematerialization process, an investor doesn’t have to perform numerous legal requirements. Therefore, it ensures a faster settlement. In addition, it prevents any types of errors and delays related to the settlement process.

Zero Paperwork

As mentioned, transferring or managing shares in the traditional method is not an easy task. An investor has to commence a lot of paperwork. It is necessary as per the legal requirements. Meanwhile, when it comes to the dematerialization process, the need for paperwork is minimal. In fact, there’s no paperwork associated with the dematerialization procedure. As a result, investors can enjoy seamless and hassle-free settlements.

Step-by-Step Guide to Converting Physical Shares to Demat Form 

Protecting a real or physical share certificate consists of various risks. There’s a chance that the share certificate may get lost or destroyed. Apart from that, risk also arises related to misplaced share certificates. Due to the amount of paperwork, it becomes difficult for investor to manage their share certificates. Not only that but transferring physical shares also takes a little bit of cost. Investors have to pay a certain amount as a part of stamp duty. Sometimes, it takes an enormous time to transfer a physical share.

That’s why investors nowadays opt for the dematerialization process. In this method, investors save not only their time but also their money. Dematerialization mitigates the chance of shares getting misplaced. After an investor purchases a share, it is automatically credited to their Demat account. All they need a reliable depository participants (DP) with whom they can dematerialize their physical share.

Here are the steps associated with dematerializing physical shares:

1. Open a Demat Account:

First, select a depository participant (DP). You can also go for brokerage firms or financial institutions. They work as an intermediary connection between investors and central depositories like CDSL and NSDL. Submit necessary documents such as proof of address, proof of ownership, proof of identity, etc. After that, open a Demat account.

2. Obtain a Dematerialization Request Form (DRF):

After opening a Demat account, your DP will provide you with a dematerialization request form, aka DRF. You have to obtain the form while attaching the physical share certificates.

3. Submit the DRF and Physical Certificates:

Now, submit the DRF form with your physical share certificates. You can also use a duplicate share certificate with the DRF form (It’s only applicable if the physical share certificates are lost or damaged).

4. Verification Process:

After that, you’ve to wait for a bit. Your depository participant or DP will verify the DRF form and physical share certificates.

5. Dematerialization Confirmation:

After verification, your DP will provide you with a dematerialization request number, aka DRN. You’ve to send the DRN to the company registrar or share transfer agents (RTA). Once RTA approves your request, it confirms dematerialization. Now you can enjoy transactions with your Demat account. You can transfer shares with the help of the Demat account you created. Your shares will also be automatically transferred to the account.

Common Issues and Solutions of Share Transfer

Despite numerous advantages, there are certain challenges or issues associated with the share transfer process.

• Sometimes mismatching of names creates disruptions in the dematerialization process.

• Incorrect details on the physical share certificate delay the dematerialization process.

• Old certificates that are damaged can delay the verification process.

• If the company is not available anymore, it can affect the share transmission process.

 

What to Do if You’ve Lost Your Share Certificates? 

In terms of lost share certificates, you’ve to follow some guidelines. Before you know more about the process, you need to understand what a loss of share certificate is. As mentioned, there’s a risk associated with the physical share certificates. When an investor loses a real share certificate, it’s treated as a lost share certificate. To get back the ownership, investors have to apply for a duplicate share certificate.

An investor needs to do the following:

File an FIR: 

First, they have to lodge a complaint or FIR to their local police station. They must make a complaint about the lost share certificates. After that, they must obtain a copy of the FIR.

Inform the Company/RTA: 

After that, the investor should inform the company registrar (RTA) about the loss of share certificates. They have to submit the FIR copy along with some necessary documents. It includes proof of ownership, proof of identity, proof of address, etc.

Publish a Notice in a Newspaper: 

In the next step, the investor should publish a notice in the newspaper. The notice must be consists of ownership details and number.

Indemnity Bond: 

Next, the investor has to submit an indemnity bond while fulfilling the KYC details. With the help of DP, they can send the indemnity bond and necessary documents to the company registrar.

Apply for Duplicate Share Certificate: 

After that, the investor has to apply for a duplicate share certificate. The company will issue the duplicate share certificates after careful verification.

Dematerializing Duplicate Share Certificates:  

Now, if an investor wants to add duplicate share certificates to their demat account, they can apply for dematerialization. The process of applying for dematerialization is the same as dematerializing physical or original share certificates.

Conclusion

The dematerialization of shares refers to the advanced technology where investors can store a physical share certificate in an electronic or digital form. Managing or storing an original share certificate can cause risks related to the misplacement of certificates. Sometimes, the physical share can get lost or damaged in the traditional method. Not only that, there are so many issues in the traditional method. When an investor goes for a dematerialization process in India, they’re enhancing safety and security while reducing paperwork and more.

To apply for dematerialization, an investor needs to find a reliable depository participant (DP). They work as a medium between investors and central depositories. With the help of a DP, investors need to open a Demat account. Later the shares will be credited into that account in digital form. Infiny Solutions can simplify this process for you.

To know more about the dematerialization process, get in touch with Infiny Solutions today.