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CA Adarsh Agrawal (CMD of SHAYVIDZ Group)     22 April 2010

PROCEDURE FOR DEMATERIALISATION OF SHARES OF COMPANY

PROCEDURE FOR DEMATERIALISATION OF SHARES OF COMPANY

  

1. The company should amend its Articles by passing a special resolution at general meeting to insert the articles relating to dematerialisation of shares.

  
2. The company should sign agreements with the Depositories, NSDL and CDSL after getting it approved by the board of Directors in Board meeting. SEBI has stipulated that if a company wishes to provide demat facility to its investors it must sign agreements with both the depositories.

  

3. In order to dematerialise its shares, a company must have electronic connectivity with the depositories. Electronic connectivity can be established either in-house by investing in computer hardware, software and other equipment or through a Registrar which has got the required infrastructure. In case a company opts for
an outside Registrar, the agreement mentioned above will be a tri-partite agreement.

  
4. Once the company is admitted in the depository system, an ISIN (International Securities Identification Number) is allotted by the depository. This number is unique for each security of the company that is admitted in the depository.

   

5. After establishment of electronic connectivity, Depositories inform the name and ISIN of the company, which has joined the depository System, to the Participant.

   
6. The company should inform the Stock Exchanges, where its shares are listed that the company's shares are eligible for dematerialisation. The shareholders should also be informed that the company's shares can be held in dematerialised form. This can also be done by issuing an advertisement in newspapers or by
way of a mention in the Annual Report of the Company.



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 7 Replies

CA Adarsh Agrawal (CMD of SHAYVIDZ Group)     22 April 2010

PROCEDURE TO BE FOLLOWED BY DP ON RECEIVING OF REQUEST FROM THE INVESTOR

1. In order to dematerialise the Physical Share Certificates, an investor will have to first open an account called as Demat A/c or Security A/c with any of the DP of his choice.

   
2. Obtain the Account No. from his DP.

 
3. Obtain the Dematerialised Request Form (DRF) from his DP.

  
4. This DRF, together with the Share Certificates desired to be dematerialised is to be submitted to DP.

  
5. The DP upon receipt of the shares and the DRF, will issue an acknowledgement and will send an electronic request to the Company/Registrars and Transfer Agents of the Company through the Depository for confirmation of demat.

  
6. DP, then issues an acknowledgement to the investor and afterwards follows the following procedure:

(a) Defaces the Share Certificates by putting a rubber stamp "Surrendered for Dematerialisation" and by punching two holes on the name of the company on the Share Certificate.

(b) Generates a Demat Request Number (DRN) through his Depository Participant Module (DPM) and fills the same in DRF at the appropriate place.

(c) Sends an electronic communication to Depository viz. NSDL or CDSL, as the case may be, to the effect that so many shares of this company (Identified by ISIN) have been received for dematerialisation.

(d) Sends the DRF and Share Certificates to the company by courier. The role of DP comes to an end with this but he must send a reminder in case credit of shares is not received in demat account of investors within a month.

 

7. The depository electronically downloads the particulars of demat request, received from DP and sends to the electronic Registrar of the company so that these shares could be dematerialized. Ultimately, the company or its RTA, as the case may be, receives two kinds of communications:

(a) DRF and Physical Share Certificates from DP.

(b) Electronic Download of Demat Request from depository through electronic Registrar.

CA Adarsh Agrawal (CMD of SHAYVIDZ Group)     22 April 2010

PROCEDURE TO BE FOLLOWED BY COMPANY AFTER THE COMPLETION OF FORMALITIES BY DP
 
1. Separate folios should be created in computer in the names of NSDL and CDSL to which dematerialised shares will be transferred.

 
2. The particulars mentioned in DRF should be checked from Share Certificates. This is very much similar to scrutiny of Share Certificates and Transfer Deed in case of Transfer of shares. However, special attention should be given that the pattern of holding written on DRF is the same as the endorsement on Share Certificates.

  
3. Signatures or shareholders on DRF should be verified from the specimen signatures as per records of the company. All the joint holders should sign the DRF.

  
4. The ISIN should be mentioned in the DRF. This, to a certain extent, ensures that the security mentioned in the DRF is the one, which the investor intends to dematerialise.

  
5. Odd lot share certificates can also be dematerialised. In fact the market lot in demat mode is one share and an investor can even hold one share in a company.

  
6. The investor can dematerialise part of his holdings and hold the balance in physical mode for the same security.

  
7. The data of all demat requests received viz. DRN, DP-Id, Client-Id, Distinctive Nos. of Shares are entered in computer.

  
8. After completion of data entry, a checklist containing all the demat requests is generated which should be checked thoroughly to ensure that only those shares for which Share Certificates have been received are dematerialised.

  
9. After ensuring that all corrections pointed out during checking of check list have been made out, updation is done in computer as a result of which the shares are transferred from the Folios of various shareholders, who have surrendered their shares for demat, to NSDL/CDSL Folio as the case may be. Hence, the Register of Members gets updated.

  
10. In the end a report is generated which contains the details of DRNs, which have been dematerialised in company's records as well as DRNs, which have been rejected on account of some objection. The report is forwarded to the company's electronic Registrar which in turn uploads the data of confirmed demat requests to depository for credit of shares in demat account of shareholders. Similarly the DRNs rejected are also uploaded to depository so that an intimation regarding rejection of demat requests is sent to DPs. Once the DRNs are either accepted or rejected for dematerialisation these are removed from pending list of company.

  
11. The DRFs & Share Certificates, which are rejected due to any objection should be returned to respective DP so that the same can be lodged again after generating a fresh DRN and rectification of objection.

  
12. The company should furnish the data of shares dematerialised comprising of Folio No., Name of Shareholder, No. of Shares, Distinctive No. of Shares to Stock Exchanges as per SEBI (Depository and Participant) Regulations, 1996 to enable Stock Exchange to update their database. A certificate to this effect should also be sent to the Depositories.

  
13. Depositories, then confirm the dematerialisation of shares to DP.

  
14. DP, then credit the holding of shares into account, electronically.

  
15. Dematerialisation will normally take about 30 days.

  
16. Partly paid up shares and fully paid up shares are identified by separate ISINs (International Securities Identification Number). These are also traded separately at the Stock Exchanges. The company issues call notices to the beneficial holders of partly paid up securities in the electronic form. The details of such beneficial holders will be provided to the RTA/Company by the Depositories. After the call money realisation, RTA/Company will electronically convert the partly-paid up shares to fully paid up shares.

 

Harisha Agrawal (Student)     23 April 2010

Thank you very much sir.

CA Adarsh Agrawal (CMD of SHAYVIDZ Group)     23 April 2010

you welcome

manish durga (apprecetice)     07 September 2010

Originally posted by :Harisha Agrawal
"
Thank you very much sir.
"

 sir please tell me what are the documents required for conversion of physical shares in to the d-mat of shares as soon as possicle

Basavaraj (Asst, Manager-Legal)     09 September 2010

Very nice

Nikhil (relationship manager)     24 May 2012

sir,

i have 200 share of sail in physical format but it is  joint with my wife . i have demat account but it is also single .i want to demeteralisedall those share please tell me what is the procedure to demetelised it.


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