Do you hold physical share certificates?
Are you struggling with the IEPF recovery claims?
Looking for ownership transfer for your physical share certificates as a legacy?
Well, with the fintech trends catching up the ease of investing has transformed too. We no longer have to hold on to a physical paper to prove our ownership. All we need is a digital fingerprint that now comes in the form of a demat or dematerialised account. This is also significant in safeguarding our investments.
Effective Apr 01, 2019, the transfer of physical share certificates was made to cease, but that didn’t stop an investor from wanting to frame his/her stock ownership at home. You can continue to have your physical certificates, just can’t transfer them and that is where the need for physical to demat conversion came into picture.
The Need vs. Want for Physical to Demat Conversion Demat
Some want to follow the latest trend, and some like things as they are. You may want to hold on to your physical share certificates as they may hold emotional value. You may not be willing to get out of your comfort zone and understand what the new digital platform has to offer.
But there are so many ways in which a demat account offers enormous benefits and convenience as opposed to holding on to traditional share certificates.
Some of the major issues that we resolve through of Dematerialization Services include:
(i) Unclaimed Dividends
Imagine you are a passive investor who likes to put in a lot of money in the market now and then, buying share certificates. You have made a lot of money and want to buy a bigger house. You change your address but forget to update it. The company you invested in is feeling very generous and wants to pay a beautiful dividend but you’re not home, right? Since you have not updated your address, you are unable to receive your dividend cheque. This unclaimed cheque goes back to the company and after a certain period, they transfer it to the Investor Education and Protection Fund (IEPF). Years pass by and your dividend remains unclaimed. If this keeps on happening, by the end of 7 years, these dividends and the physical share certificates get transferred by the company into the IEPF. You sit back and relax at home, adorning your beautiful share certificates and feeling proud, while in reality you no longer own them.
(ii) Lost or destroyed share certificate
You wake up one day and don’t find your share certificate in its place. It sinks in that you have lost the certificate that you bought paying a fortune of your hard-earned money. You go to the police, contact the company, give your details, follow a long tedious process, and finally get a duplicate share certificate. You end up spending a lot of time and energy getting a duplicate certificate made.
(iii) Share Transmission
When a close family member dies and you inherit his shares, you need to follow a long tedious process of getting the legal name on the certificate changed. You cannot sell those shares with the name of the deceased printed on them. For this, you need to furnish a long list of documents. You are already in pain and this hectic process makes you even more vulnerable. Connect with us now for the list of documents.
(iv) Unlisted Company
Let’s say you are a passive investor who owns a huge portfolio. You don’t keep a track of all the companies in which you have invested. Let’s assume one of those companies goes out of business for some reason, and the certificates that you are holding on to, so tightly, become useless. Many shell companies don’t bother to update their list of shareholders with the RTA.
When you go to the RTA with the request to demat those shares, your request is denied because you don’t appear on that company’s list of shareholders. Imagine setting aside your savings by investing in a company and suddenly it just vanishes.
(v) Change in Corporate Events
Let’s assume the company you have invested in feels generous and hands out bonus shares/stock split/right issue. It’s been a couple of days now and you are waiting for your mailman to deliver your ownership certificate for the new shares you are entitled to. You check the news to pass your time and guess what!? This company’s shares have hit an all-time high but seem to plunge in the near term.
The doorbell rings and your shares have been delivered. Imagine if you would have gained these shares a couple of days back and sold them at their peak, the huge profit you would have made compared to the shares you have now that are trading at a loss.
Another scenario is where you are entitled to receive bonus shares and you see your company’s stock surging! Not only will your original investment rally but now you also have the luxury to sell these additional shares at a nice premium. You wait for your mailman to deliver the extra shares. It takes forever and after finding out you realise your newly issued share certificates have been lost in transit. You file complaints, go to the police, follow up on the matter, get duplicate certificates made for yourself and reach home to see the stock price has come down again. Even if you can make some profit out of this situation, you still have lost a lot of time and energy in the process.
(vi) Signature Change
Looking at huge profits on your investing horizon but signatures won’t match? The reasons for the same could be numerous but if the signatures are not matching, your investment is as good as lost treasure. A demat account solves most of your problems and inconvenience by providing a well-established platform for all your trading and investing needs
Advantages of Converting Your Physical Share Certificates into Demat form
The demat account ensures you don’t miss out on any opportunity of making profits. You can access it anywhere, anytime.
Planning to go for a vacation overseas? Your demat account goes with you to ensure you can buy new securities or book your profits anytime or anywhere you need them. You want to sell some of your shares but don’t want to close your entire position. You don’t have to. Unlike traditional share certificates, your demat account allows you to sell a part of a particular company’s securities. A demat account also enables the seamless transfer of securities in case of a merger or tender offer.
The demat account offers a nomination facility wherein like the traditional banking system, you appoint someone as your nominee, who, after your demise, takes over your shares. They don’t have to worry about any legal aspects related to the transfer of holdings, it smoothly gets transferred to them. Moreover, bonus shares and stock splits automatically get updated in the demat account.
Holding shares in a demat account protects you against possible frauds like theft or forgery. It keeps your investment safe. It reduces the maintenance cost as you don’t have to worry about keeping papers locked in a vault. The demat account has many features that help an investor in making trade decisions. You can track stock holdings. At any given point, you know the exact value of your holdings along with various corporate actions.
The demat account offers liquidity for the end-user as a trade that could traditionally take a large amount of time now happens in seconds. You want to free up some money for yourself and with a few clicks, you have it credited to your account. You don’t have to go places or wait in queues with your share certificates to avail your money. It’s right there for you when you need it.
RURASH has an exclusive vertical that caters to converting Physical Share Certificates to demat form. You can also read about the process of Physical to Demat conversion here.
For any guidance regarding financial instruments, Connect with the relationship manager now on Call at +91 22 4157 1111 or write to: demat@rurashfin.com.
Also Read: Benefits of Dematerialization and Why it is Mandatory to convert Physical Shares to Demat form?