How to Obtain and Handle Physical Share Certificates in the Digital Age
With the increasing power and prevalence of the online world, the concept of physical share certificates is becoming a thing of the past. However, for those who still possess physical shares, it is crucial to follow the correct procedures for obtaining and handling these certificates.
Obtaining Physical Share Certificates
The process of obtaining a physical share certificate is simplicity itself, but it requires a few steps. If you own physical shares, the first step is to reach out to the issuing company to request your share certificates. Alternatively, if you have broker-dealers holding your shares, you can request the certificates through them. It is important to note that your broker-dealer may charge a fee for this service.
Once you have received your share certificates, it is essential to understand what to do next. The certificates typically come in triplicate, with one copy being sent to you, one to the company's registrar, and another to be filed with the company's secretariat.
Dematerialization of Physical Share Certificates
After obtaining your physical share certificates, the next critical step is to dematerialize them. Dematerialization is the process of converting these physical certificates into electronic form to facilitate their trading in the stock market.
The dematerialization process can be initiated by either the holder of the shares or the registered broker. It involves surrendering the physical share certificates at a demat depository (like NSDL or CDSL) to be converted into electronic form. Once dematerialized, the shares are added to your demat account, where they can be traded freely and without the physical documentation.
What is a Demat Account?
A demat account is a digital repository for your electronic securities. It holds all your shares, bonds, and other securities in electronic form, making them easier to trade, transfer, and manage. All trades in the stock market are now conducted through demat accounts, eliminating the need for physical share certificates.
Why Dematerialize Your Physical Share Certificates?
Without dematerializing your physical share certificates and adding them to your demat account, you miss out on several benefits. These include:
Security: Demat accounts offer better security measures to protect your investments. Convenience: Trading through demat accounts is faster and more convenient, as you don't have to physically handle or manage certificates. Transparency: Transactions in a demat account are transparent and traceable, making the process more trustworthy. Efficiency: The demat system is designed for efficiency, with automated processes for trading and settlement.How to Dematerialize (or Not) Physical Share Certificates?
Dematerialization is a straightforward process, but there are a few steps to follow:
Contact your Broker: Inform your broker that you wish to dematerialize your shares. They will guide you through the process. Submit the Physical Certificates: Take your physical share certificates to your broker or directly to a depository unit (like NSDL or CDSL). Get a Certifying Receipt: The certificates will be converted into electronic form, and you will receive a certifying receipt. Update Your Demat Account: Your shares will now be in your demat account, and you can manage them online.Conclusion: Embracing the Digital Future
While physical share certificates are a relic of the past, they still exist for those who have been holding on to them. However, it is crucial to understand that holding onto physical certificates is not only inconvenient but also less secure and less efficient. By following the correct procedure for obtaining and dematerializing your physical share certificates, you can fully embrace the digital future of stock trading and enjoy the benefits that come with it.