Financial Matters - Dematerialisation of Securities ( CSDL )

DEMATERIALISATION OF SECURITIES:

Objectives :-

To enable Beneficial Owners to convert their scripts existing in physical form to electronic balances in accounts maintained by CDSL, through DPs.

Features :-

Dematerialization is a process by which the scrips existing in paper form are converted into electronic balances maintained in securities accounts held by the BO with a DP of CDSL.

1. However, to Dematerialize the share certificates an investor has to

2. Fill up a Dematerialization request form, which is available with the DP.

3. Submit share certificates along with the forms (Write “Surrendered for Demat” on the face of the certificate before submitting it for demat).

4. Receive credit for the dematerialized shares within 15 days.

Only those securities held in the form of certificates registered in one’s name individually or jointly can be dematerialized. Moreover, the securities must belong to the list of securities admitted for dematerialization at CDSL. Securities held in street name (Market deliveries) cannot be dematerialized.

If one wants to dematerialize the securities of a company that is not admitted with CDSL, then the investor should request the company to have that security admitted with CDSL and once that has been done, he can get it dematerialized.

SEBI has laid down a separate procedure for simultaneous transfer and demat of share’s in one’s favour. The transfer cum demat facility is available only in respect of securities of those issuer companies, who have entered into special arrangement with the depositories. After the company / RTA has transferred the shares in the name of the Transferee, it will send option letter to the transferee to ascertain whether he wishes to have them dematerialized. Incase the transferee opts to receive them in demat mode; he will submit the option letter along with the DRF to the DP. DP will forward the DRF and the option letter to the company / RTA, whereupon company / RTA will demat them and the BO account will be credited.

In demat form the market lot is one share and therefore, there is no question of odd lot. Dematerialized shares do not have any distintives or certificate numbers. In demat all shares are fully fungible, which means that any 100 shares of a company are similar to any other 100 shares of that company.

While CDSL does not levy any charges for dematerialization of securities, DPs collect dematerialization charge together with postage / courier charges.

PROCEDURE FOR DEMATERIALIZATION :-

To Materialize any physical security, one will have to open a demat account with a DP of one’s Choice.

Thereafter, all one has to do is to fill in a DRF (Demat Request Form) and submit the same with the shares / securities Certificates to the DP for dematerialization.

DP defaces and sends these certificates to the Issuer / Registrar who credits an equivalent number of securities in the demat account maintained with CDSL. For each scrip, a separate DRF has to be used.

The investor shall fill up the following details in the DRF :

Investors account number with the DP

DP ID

DP Name

ISIN

Name of the Issuer

Type of the Security

Total quantity to be maintained

Name (s) of the holder (s)

Certificate Details : Folio No., Distinctive Nos., Certificate Nos., No. of Securities

Lock in status.

The registered holder (s) shall sign the DRF.

As per the specimen signature (s) recorded with the DP and

As per the specimen signature (s) recorded with the Issuer / RTA.

The Investor shall also surrender the physical certificate to be dematerialized along with the duly filled DRF to the DP. Immediately on receipt of DRF along with the scripts the DP should give the counter acknowledgement to the BO

The DP shall verify the following :

· Whether the DRF is complete.

· Whether the Certificate details mentioned on the DRF and on the Certificate enclosed, tally.

· Whether the name (s) of the holder (s) and the order of the names of the holders appearing on the certificates exactly tally with those records under the BO Account maintained with CDSL.

· Whether all the holders have signed the DRF and the signatures of the account holders tally with those recorded by the DP.

· If there is any discrepancy in any of the details, the DP will get it rectified from the investor and the error free DRFs will be taken up for further processing by the DP.

The DP shall capture the details from the DRF & Certificate through the front-end system provided by the CDSL and shall generate the DRN on the same day or latest by the next working day from the date of receipt of DRF.

In case the Securities are in “ Lock – In “ status the following details need to be specified:

Ø Lock in Reason

Ø Lock in Release date.

The DP shall then write down the DRN on the DRF and deface the certificates by affixing a rubber stamp “ Surrendered for Dematerialization “. The DP has to take proper care that the stamp should be affixed in such a manner that no material information such as distinctive numbers, Folio Nos., etc., on the Certificate is smudged or becomes illegal.

The DP shall then mutilate the certificates, by punching two holes at the top of the certificates.

The DP shall then give a “System Generated acknowledgement” of the demat request to the BO. This acknowledge will contain details such as BO A/c No., BO Names, ISIN, Name of the Issuer & Type of Security, Quantity, Distinctive / Certificate / Folio No., Date of request, DRN. The DP shall authorize this acknowledgement by putting his seal / rubber stamp & Signature of the authorized signature (may be printed on the letterhead of the DP).

CDSL shall electronically send the DRF data to the issuer /RTA after the DRN is generated. The process is done automatically by the system.

The DRF shall be authorized by the DP by putting his seal & signature. The certificates & the original DRF shall be sent to the issuer / RTA along with a covering letter printed on the DPs letterhead. This covering letter content will be generated by the CDSL system. A copy of the DRF is to be maintained by the DP for its own reference and records.

The DP then shall capture the dispatch details on the front – end system such as the dispatch reference no., dispatch date, name of the courier, etc. The DP must dispatch the physical documents within a maximum of 2 days from the date of DRN Generation.

For items marked confirmed from the Issuer / RTA, CDSL activates the balances in the BO account and they will be treated as fully dematerialized securities.

DP will print the statement of holding for the BO account for which the balances have been activated by CDSL and mail / delivery the same to the BO.

The dematerialized process must be completed within 15 days or as specified by the CDSL from time to time.

Incase of rejection of certificates, unless there is a compelling reason, the RTA / Issuer will print fresh certificates in lieu of the defaced certificates and return the same under the objection to the DP concerned , along with an appropriate rejection letter.